Why the US is collapsing

March 22, 2008 6:35 PM

The leader of the Swedish Pirate Party explaining how the US went bankrupt in 1971, and has been covering it up through an accelerating whack-a-mole borrowing frenzy that is bursting right now.

It has been paying rapidly growing VISA bills using MasterCard and vice versa for 37 years. The creditors are catching up, and the US is about to go extinct as a superpower. Become irrelevant. It is not yet on its death bed, it is still walking, breathing and capable of entertaining a conversation in public. But there are ominous bloodstains on its hands used to cover the painful coughing.

The article manages to talk about Bretton Woods without getting overly Paul-tarded, perhaps thanks to the European perspective (which also means he doesn't focus on the mortgage crisis).

A recent letter to the EU Commission (in english) regarding 'Creative Content Online' by the same guy. (via)

posted by blasdelf (121 comments total)

Given his strong grasp of economics and politics, it is inevitable that the Pirate Party shall usher in the era of Sweden as a great power. *eye roll*

Someone needs to begin collecting a list of people who are currently on the 'US Collapse is Imminent" bandwagon, so that we can collectively berate (or congratulate) them in a few years time.
posted by boubelium at 6:47 PM on March 22 [1 favorite]

the US is about to go extinct as a superpower. Become irrelevant.

Ahh. No. I'm having trouble understanding the depth of ignorance it would take to believe the US will become irrelevant in the next 15 years, which is what this guy is saying. 15 years from now the United States will still have a navy stronger than all the navies of the rest of the world combined. It will still have an army capable of destroying any two or three other armies combined. It will still have thousands of nuclear warheads and intercontinental delivery systems. It will still have a significant, though much smaller, percentage of the world's economy.

This is a pipe dream. The level of economic collapse the United States would have to undergo in order to "go extinct as a superpower" and "become irrelevant" in the timespan he is speaking of would be stunning. Such a precipitous collapse would almost certainly take the world economy along with it it.

It will kill the dollar as a world trade standard, the American economy, the American military, and the United States' status as a superpower. Just like when the Soviet union collapsed. It is even conceivable that the United States will fracture as a nation, just like the Soviet Union did

You can almost feel the glee radiate off him in anticipation. I bet he gets wood thinking about it.

This is what the pirate fight is about. Preventing fascism from spreading amongst corrupt administrations; defending civilization against the systematic curtailment of civil liberties in order to maintain a false image of prosperity and enrichen a self-serving elite. You could even say "defending democracy". The file sharing debate is but the symbol

We steal movies FOR OUR FREEDOMS!!!!!!!!!!!!11!!!!!1!!
posted by Justinian at 6:50 PM on March 22 [8 favorites]

Lastly, he is overlooking the old saw about banks and owing money. Except in the case of the United States it's more like: "If you owe the bank a thousand dollars, the bank owns you. If you owe the bank nine trillion dollars, you own the bank, the bankers, and everyone the bankers have ever met."
posted by Justinian at 6:53 PM on March 22 [4 favorites]

Yawn.

He describes the 3 trillion he cites:

Actually, it isn't a lot of money in the global economy. It's about $7,500 for every man, woman and child in the US. It is about four years' worth of American military spending. It's about one-quarter of the American GDP.

I am very much in favor of resisting global credit fascism, which he sees as the heart of what's happening in the US and in the global economy. I might even buy the perspective, actually. But eight years ago, that amount of money was essentially available to the Feds as a result of a hot economy with no fucking bullshit war debt to cover.

The US is not yet in the boat the Spanish built circa 1600; the war debt is not yet large enough to lead to the results forecast in the piece.

Now, without serious work on new debt sinks, such as Iraq, and a plan to diffuse the deferred-and-leveraged dotcom-into-real-estate bubble, we are in for hard times, and inflation is clearly in place RIGHT NOW, despite the taboo US media places on the concept.

But this is not Berlin, 1928 anymore than it is Seville, 1652. It might be yet. But this is an election year. Eighteen months from now, I hope to see some prosecutions in tandem with sensible legislation which will resolve much of this.

Of course, historically, you don't get the better laws until an actual disaster goes down. So to an extent, my optimism is predicated on a nasty nine months. And I have to open an IRA by April 15th to get a sweeter refund! Ai!
posted by mwhybark at 7:01 PM on March 22 [1 favorite]

The leader of the Pirate Party, this fine fellow, has a degree in natural science and credits towards a degree in engineering. He is undoubtedly the most qualified person to tackle the big issues of how and why nations rise and fall.

I think economics is so easily grabbed onto by the crazies (Ron Paulers, I am looking at you) because people claim to have figured out all of its rules and !shocker! it is screwing you the little guy over. In reality, economics is incredibly complex and exceedingly boring. The guys who put together Bretton Woods? Extremely smart and very dull. Really, it's true. To get a good grasp of these issues you have to study for years and be the sort of person who enjoys looking at numbers, but not in a fun physics way. This isn't to say the study of economics is to be discouraged. Certainly not, it just isn't as exciting as running around and telling everyone about the shady way big business/big government/the jews are stealing your money. So, if a charismatic politician tells you that he has seen the economic future, he hasn't. He isn't smart enough or boring enough to undertake the effort.
posted by boubelium at 7:07 PM on March 22 [9 favorites]

A Pirate Party? Arr! Sign me up! Shiver me timbers, pieces of eight, what what!

... Oh, wrong kind of Pirate. Not necessarily the kind of pirate that makes an authoritative source on economics, hey?
posted by WalterMitty at 7:10 PM on March 22 [1 favorite]

Ahh. No. I'm having trouble understanding the depth of ignorance it would take to believe the US will become irrelevant in the next 15 years, which is what this guy is saying. 15 years from now the United States will still have a navy stronger than all the navies of the rest of the world combined. It will still have an army capable of destroying any two or three other armies combined.

Yeah, but so what? The U.S. isn't going to elect another Bush, and conservatism is dead as a political force in the country. So even though we have all of these weapons, we don't have the political will to use them.

And even then, even if neoconservatism swept through the country again, all we can really do is go beat up small pointless nations. All the countries worth conquering have nuclear weapons and are thus uninvadeable.
posted by delmoi at 7:15 PM on March 22

The leader of the Swedish RIAA Takedown Notice party has something to say to Rick.
posted by It's Raining Florence Henderson at 7:17 PM on March 22

seriously, anyone actually gonna read the article or just be snarky? it doesn't matter how many ICBM's you have if your country is bankrupt. It doesn't matter how many submarines you have if they are all paid for by foreign countries. What, creditors come asking for their trillion dollars back, you gonna hold up a gun and tell him to go home? Great plan that one.

as said, though, much of this will be over the head of anyone not specifically trained in economics. you may find this article interesting, however:

Taxation through Inflation, The economics of empire, and Iran.
posted by Dillonlikescookies at 7:20 PM on March 22 [1 favorite]

So even though we have all of these weapons, we don't have the political will to use them.

I guess I wasn't reading "become irrelevant" and "decides that flattening random countries isn't worthwhile" as the same thing at all.
posted by Justinian at 7:22 PM on March 22

What, creditors come asking for their trillion dollars back, you gonna hold up a gun and tell him to go home? Great plan that one.

Yes, actually. It's called the Lex Luthor Doctrine, and it's pretty much foolproof.
posted by It's Raining Florence Henderson at 7:24 PM on March 22 [10 favorites]

Yes, Dillonlikescookies, despite the fact that I quoted from various points of the article, I clearly did not read it at all because I think the guy is out to lunch.

as said, though, much of this will be over the head of anyone not specifically trained in economics

You seem to have completely missed the point of that statement. The "leader of the Pirate Party" has no training in economics. Boubelium was specifically criticizing Falkvinge's facile and superficial analysis, not posting in support of it.
posted by Justinian at 7:25 PM on March 22

We suck, sure.
But everyone knows your particle-board bookshelves won't last more than a month or so.
And those Lingonberry drinks?
My mom had one last Christmas.
She's a diabetic.
The label was like, in Nordish.

IKEA almost killed my mom.
posted by Dizzy at 7:28 PM on March 22 [5 favorites]

This guy doesn't know nothing about economics -he is actually possessed of negative knowledge - everything he knows is wrong.

I'm not going to sit here for a thousand hours and deconstruct this nonsense. It suffices to ssimply state that he arguments are a mishmash of poor credit card analogies, tired arguments about fiat money, and shock at the size of the debt.

Let me explain who is smart and who is stupid, and why Wall Street is the center of the world's banking system, and not London or Zurich or Paris.

The United States has borrowed a rough total of about 9 trillion dollars from the rest of the world. That means that we have obligations to pay bondholders, over half of whom are foreign countries and banks, about 9 trillion dollars.

Dollars. Not gold, or silver, or Euros, or pieces of eight. Dollars.

Guess what happened since about 2000? The value of the dollar dropped by half. Why? Mostly because low interest rates flooded the system with money. So the value of the dollars those bondholders lent us in 2000 would be about half if we paid them back today, plus interest. $9 billion today is worth the same in Euros as $4.5 billion in 2000. In 2000, the debt was almost $6 billion. The debt increased by 33%, but the dollar declined by 50%.

Furthermore the size of the debt relative to GDP is actually less than it was during the 90's, and far less than during the 40's and 50's.

True, Europe has a bigger GDP, but only slightly. However, the per capita GDP is far higher in the US, by about $15,000. The U.S. has considerably lower unemployment and doesn't have a civil war brewing the way the EU does with Serbia. Furthermore, we don't have neighbors like Russia. And China looks great over the last 5 years, but they have food inflation of 18%, so let's see how the next 5 years work out for them.

So let's dispense with the nonsense.
posted by Pastabagel at 7:30 PM on March 22 [23 favorites]

The Comptroller General of the United States proclaims that our current standard of living is unsustainable unless drastic action is taken: "I don't know anyone who knows their history, who is good at math who things we can grow our way out of this problem... This isn't just about numbers, we are mortgaging the future of our children at an unprecedented rate."
posted by bhouston at 7:33 PM on March 22 [1 favorite]

Wow. Not counting dates or the absolute specifics very similar to my own original theory I yam clevarr.

(If we are to assume "kiting" = "whack-a-mole". And I believe it does.)
posted by uncanny hengeman at 7:34 PM on March 22

I don't see how a massive military and nukes is any use in this age.

There is no practical use for a nuke. The environmental and social consequences render it wholly impractical. It is a weapon of very last resort, when everything else has completely failed and there's nothing left to lose.

As for the modern military, it simply doesn't work. Any local population worth a damn is going to use guerilla and terroristic tactics to counter it. You can't just throw cannon fodder at the invaded people's any more. Hell, they'll sneak into your own country and knock down a tower or two in revenge, poison the well, spread disease, whatever. Modern military isn't in a position to deal with that shit.

It's a post-superpower age. Diplomacy and economic force are the only practical tools of use, with rare exception.
posted by five fresh fish at 7:38 PM on March 22 [6 favorites]

Not to worry, for America's first straight female President will have a freeloading sibling who shall use his powers of mooching to weasel out of the nation's crippling debt crisis.

Tape-o! Me say taaaape-o!
posted by Sys Rq at 7:43 PM on March 22

That's a great post, Pastabagel. I've never heard it explained like that before.

But, if I have an inability to pay what I owe, and all that borrowed money has been pissed up against the wall, how is "ha ha I owe you less than you planned I was going to owe you!" going to help?

Do we have to assume that America has the capacity to easily "manage" this debt?

Genuine question, and possibly a bit too simplistic? I dunno. Just askin'.
posted by uncanny hengeman at 7:43 PM on March 22

it doesn't matter how many ICBM's you have if your country is bankrupt. It doesn't matter how many submarines you have if they are all paid for by foreign countries. What, creditors come asking for their trillion dollars back, you gonna hold up a gun and tell him to go home? Great plan that one.

You should see the gun.
posted by Pastabagel at 7:47 PM on March 22 [2 favorites]

So let's dispense with the nonsense
(Mutter, gesticulate, facial tic) . . .so I guess its back to the Britlohiltonhan and Victory Gin for me.
posted by isopraxis at 7:47 PM on March 22

Devalue the dollar. Blame the counterfeit Superbuck. Create a new currency and wholly disclaim any responsibilty for the old currency, rendering it utterly worthless. Profit?
posted by five fresh fish at 7:48 PM on March 22

uncanny hengeman: what Pastabegal is actually describing is a inflationary situation in the USA. You can't debase your currency without having price inflation at home. Also it destroys the savings (as well as the debts) of your population. Also, Pastabegal is wrong about the preeminence of NYC, it has already lost its place as the stock market capital of the world (it is now London.) The USD is also quickly losing its status as the reserve currency of choice primarily because of what Pastabagel is saying. Pastabagel states a bunch of facts, but they don't all add up to a good picture, just a changing picture. If you throw in the changing demographics as well as the propensity of Americans to consistently spend more than the make, you are looking at a very jarring correction and a decrease in the US standard of living.
posted by bhouston at 7:49 PM on March 22 [3 favorites]

it doesn't matter how many ICBM's you have if your country is bankrupt. It doesn't matter how many submarines you have if they are all paid for by foreign countries. What, creditors come asking for their trillion dollars back, you gonna hold up a gun and tell him to go home?

why not? if you've got the biggest gun, just what is mr creditor going to do about it?

There is no practical use for a nuke.

sure there is - people aren't going to repossess, collect, enforce judgements or ANYTHING against us that we don't want them to

it's immoral as hell, but just what can be done about it? - you can refuse to lend us more and screw your own economies in the process

you can't MAKE us pay you back

y'all been HAD
posted by pyramid termite at 7:49 PM on March 22

five fresh fish: "Devalue the dollar. Blame the counterfeit Superbuck. Create a new currency and wholly disclaim any responsibilty for the old currency, rendering it utterly worthless. Profit?"

That doesn't help if all the obligations of the US government are still owed. The only solution is for a significant shock to the US standard of living and its has already started. Pastabagel is wrong as well with regards to the GDP per capital, it is quickly falling in the US as compared to countries who pay their citizens in Euros. Pastabagel is so incredibly wrong and generally compensatory its funny.
posted by bhouston at 7:52 PM on March 22

pyramid termite: "y'all been HAD"

To a degree, but its going to hurt more on the home front than aboard.
posted by bhouston at 7:53 PM on March 22

"you can't MAKE us pay you back
y'all been HAD"

doesn't really make for good policy. you're not serious, are you? America would become increasingly isolated, be effectively cut off. You might be able to say no to paying back your debt, but you can't solve economic problems with force in the long term, especially once your rationale is obvious and the international community holds you in contempt. No country, not even america, can survive without trade relations with the rest of the world and maintain any sort of first world standard of living.
posted by Dillonlikescookies at 7:59 PM on March 22 [3 favorites]

maybe, bhouston, but i think the problem may have been exaggerated quite a bit - it seems to me that if it was going to fall down like a house of cards, it would have by now
posted by pyramid termite at 8:02 PM on March 22

. . . But it is going to be sweet to pick up a pristine chunk of Montana or Oregon when the Union is parted-out Bear-Stearns-style for cents on the Euro.

And I'm gonna call my chunk Newfreelandia.
posted by isopraxis at 8:03 PM on March 22 [1 favorite]

But, if I have an inability to pay what I owe, and all that borrowed money has been pissed up against the wall, how is "ha ha I owe you less than you planned I was going to owe you!" going to help?

We do have the ability to pay what we owe, we just choose not to, because we don't want to make the sacrifices. The Federal government pulls in about $2.5 trillion in revenue. The debt is 3.6 times the government's revenue. Instead of running massive deficits, they could make significant progress to paying it down.

The real problem is that we have mounting trade deficits that don't appear to be going away, and given the size of China and the potential of India, the only solution to that is to spend less.
posted by Pastabagel at 8:03 PM on March 22

You should see the gun.

Oh come on, this is 2008! Wars can no longer be won by just adding more hardware; you need subtler tactics. For instance, in Sweden, if we want to eliminate somebody, we sell them furniture that will collapse on top of them, and Lingonberry drinks with bizarre ingredients. And THEY pay US!
posted by martinrebas at 8:09 PM on March 22 [8 favorites]

Also it destroys the savings (as well as the debts) of your population. Also, Pastabegal is wrong about the preeminence of NYC, it has already lost its place as the stock market capital of the world (it is now London.) The USD is also quickly losing its status as the reserve currency of choice primarily because of what Pastabagel is saying. Pastabagel states a bunch of facts, but they don't all add up to a good picture, just a changing picture. If you throw in the changing demographics as well as the propensity of Americans to consistently spend more than the make, you are looking at a very jarring correction and a decrease in the US standard of living.
posted by bhouston at 10:49 PM on March 22

Yes, inflation destroys savings, but your last sentence points out why this doesn't matter - Americans have the lowest rate of savings of the industrialized world. The situation isn't great, but it isn't the end of the world. This mantra has been repeated endlessly since the mid 80's, and it has never and will never come to pass.
posted by Pastabagel at 8:10 PM on March 22

You might be able to say no to paying back your debt, but you can't solve economic problems with force in the long term

eurpoe and the rest of the world doesn't have a real military compared to us - it's more accurate to say that you can't solve economic problems with impotence

No country, not even america, can survive without trade relations with the rest of the world and maintain any sort of first world standard of living.

there will always be people and countries we can buy off - divide and conquer

But it is going to be sweet to pick up a pristine chunk of Montana or Oregon when the Union is parted-out Bear-Stearns-style for cents on the Euro.

except that it won't happen

no, it looks like we're just going to drag it out until terms are renegotiated and the world will settle for what it can get
posted by pyramid termite at 8:16 PM on March 22

Pastabagel wrote: "Yes, inflation destroys savings, but your last sentence points out why this doesn't matter - Americans have the lowest rate of savings of the industrialized world. The situation isn't great, but it isn't the end of the world. This mantra has been repeated endlessly since the mid 80's, and it has never and will never come to pass."

You don't know what you are talking about. Americans have only had a negative savings rate in the past 3 years. Consumer borrowing has funded the US current account deficit of late. This will stop and thus there will be a correction in the consumer standard of living.

Of course it is not the end of the world, but the world doesn't tend to end so I don't know what you mean by this. For those that experience it, it is going to suck. Medicare, universal health insurance and social security are not going to be affordable, no matter what Clinton/Obama promise -- the discussion on that topic is not connected to reality. Thus the US populous is going to be entering into a harsher reality than they are used to.
posted by bhouston at 8:18 PM on March 22

Pastabagel is wrong as well with regards to the GDP per capital, it is quickly falling in the US as compared to countries who pay their citizens in Euros.

Here is the chart, from the EU itself. Look at 2007 and look at 2008. You compare countries within a year, not across years, because the chart is indexed to purchasing power standard that nets out all the currency fluctuations. Countries with a number over 100 have a higher GDP per capita than the EU average. The U.S. GDP per capita is 46% higher than the EU average. The EU isn't just Germany and France. It includes Greece and Bulgaria as well.

The solution to these problems is never a shock. Shocks destroy countries and start wars. The solution is always extremely gradual.
posted by Pastabagel at 8:21 PM on March 22

pyramid termite wrote: "maybe, bhouston, but i think the problem may have been exaggerated quite a bit - it seems to me that if it was going to fall down like a house of cards, it would have by now"

Go watch that video I showed you earlier. The main liabilities of the US government are medical, social security and soon universal health care. These are the programs that are in jeopardy and since they are dramatically underfunded, it means that you aren't going to get what you thought you were going to get at the tax rate you are currently paying, thus means that you will have to pay more out of your own pocket thus you will overall be poorer. Inflating the currency is also a subtle tax as everything you buy is more expensive and this has been happening a lot of late and if there are more bailouts and a lower overnight rate, there will be more inflation.
posted by bhouston at 8:23 PM on March 22

I always love it when Europeans, who can't seem to run economies in ways that create jobs, prophesy the imminent doom of the world's most resilient and innovative economy. Has the US been ill-served by 8 years of Bush? Absolutely. But it's been through much worse, and has remained the largest and most creative economy in the world. It will take more than a recession, or the ranting of some Eurotrash pseudo-economist, to change that.
posted by Dasein at 8:29 PM on March 22 [1 favorite]

I'm so confused. Should I buy canned food and shotguns, or short them?
posted by mullingitover at 8:31 PM on March 22 [4 favorites]

The main liabilities of the US government are medical, social security and soon universal health care.

how can we have a liability we haven't contracted for yet? - we've yet to pass universal health care, so you can't count that
posted by pyramid termite at 8:36 PM on March 22

Pastabagel wrote: "Here is the chart, from the EU itself. Look at 2007 and look at 2008. You compare countries within a year, not across years, because the chart is indexed to purchasing power standard that nets out all the currency fluctuations. Countries with a number over 100 have a higher GDP per capita than the EU average. The U.S. GDP per capita is 46% higher than the EU average. The EU isn't just Germany and France. It includes Greece and Bulgaria as well."

I didn't say that the US was lower than all of the EU. Rather, the US is dropping relative to the EU and your chart shows this incredibly clearly: In 2006 US PPP relative to the EU was 157.8, in 2008 it is forecast to be 146.7, a drop of 7% in two years, the highest drop in that chart, and there is more to come.
posted by bhouston at 8:36 PM on March 22

I'm so confused. Should I buy canned food and shotguns, or short them?

Buy stock in gun companies while you tell everyone else the sky is caving in.
posted by IronLizard at 8:37 PM on March 22

Not gold, or silver, or Euros, or pieces of eight.

Pieces of eight happen to be silver. For reales.
posted by Smart Dalek at 8:40 PM on March 22 [4 favorites]

Eighteen months from now, I hope to see some prosecutions in tandem with sensible legislation which will resolve much of this.

Please excuse me while I laugh myself to tears, then weep myself into a severe alcoholic depression.
posted by papakwanz at 8:41 PM on March 22 [1 favorite]

In 2006 US PPP relative to the EU was 157.8, in 2008 it is forecast to be 146.7, a drop of 7% in two years, the highest drop in that chart, and there is more to come.

So the definition of "collapse" now means that if current trends remain unchecked, the US economy will suck as bad as the EU economy in 16 years?
posted by It's Raining Florence Henderson at 8:46 PM on March 22 [2 favorites]

Dasein writes "I always love it when Europeans, who can't seem to run economies in ways that create jobs, prophesy the imminent doom of the world's most resilient and innovative economy. "

True, but being an unemployed EUian is generally more comfortable than being an unemployed USian. Plus they get vacations. That's where they take several weeks off from work (paid!) and travel and stuff. I know it sounds crazy, but they do that.

A lot of the wealth in the US comes from having low population density and vast natural resources. Not so much a result of our hard work as it's from our country robbing the right undeveloped indigenous peoples.
posted by mullingitover at 8:47 PM on March 22 [1 favorite]

You don't know what you are talking about. Americans have only had a negative savings rate in the past 3 years. Consumer borrowing has funded the US current account deficit of late. This will stop and thus there will be a correction in the consumer standard of living.

Relax. The mantra that's been repeated since the 80's is that the debt is too big and we're bankrupting the country, etc.

The problem is not the debt, or the budget deficits, the problem is the trade deficits. That link is an intelligent discussion on the topic, rather than a half-assed recitation of history posing as economics.

Ironically, the trade deficit problem isn't helped by a guy who runs a website pirating entertainment, most of which is made in the U.S for export.

I didn't say that the US was lower than all of the EU. Rather, the US is dropping relative to the EU and your chart shows this incredibly clearly: In 2006 US PPP relative to the EU was 157.8, in 2008 it is forecast to be 146.7, a drop of 7% in two years, the highest drop in that chart, and there is more to come.
posted by bhouston at 11:36 PM on March 22

Dude, seriously, read the link:"Please note that the index, calculated from PPS figures and expressed with respect to EU27 = 100, is intended for cross-country comparisons rather than for temporal comparisons." You can't compare years with that chart.

And everybody on earth knows the US GDP is growing slower than it did in 2006. The point is that GDP per capita in the US is massively higher than it is in the EU, and this was true in 2006 and 2008, and shocker, it will be true in 2010. The article in the post stated "Let's take that again, because it is a shock to many: The European Union has a larger economy than the United States. A larger economy with which to back its currency, the euro" as proof of the US's decline, butI cited this as proof that not only is this statistic wrong, the economy per person in the US is larger than it is in europe, but it proves the opposite point, that hte US is not near collapse.

I'm not exactly sure what your point in this thread is. Do you think this guy is right? I have stated clearly in this thread and countelss others that the situation is going to be unpleasant for Americans, but that does not mean it is going to be wonderful for everyone else in the world, nor does it mean the collapse of the American empire, whatever that is.
posted by Pastabagel at 8:51 PM on March 22 [1 favorite]

A lot of the wealth in the US comes from having low population density and vast natural resources. Not so much a result of our hard work as it's from our country robbing the right undeveloped indigenous peoples.
posted by mullingitover at 11:47 PM on March 22

To be fair, we did a lot of that robbing when we were still Europeans.
posted by Pastabagel at 8:52 PM on March 22 [3 favorites]

I always love it when Americans, who can't seem to run economies in ways that create paid time off, prophesy the imminent doom of the world's most humane and progressive economy.

the US...has remained the largest and most creative economy in the world.

I'll remember that when I'm on my 5th week of paid holiday next week.

Work to live, or live to work?
posted by dash_slot- at 8:53 PM on March 22 [7 favorites]

someone should invent a term for the desire of people to believe they live in dramatic, world-changing "end times," when the boring reality is that things will, in all likelihood, stay just about the same for the foreseeable future.

Certainly if any of this stood the tiniest chance of happening, at least a few non ass-clowns would be talking about it.
posted by drjimmy11 at 8:58 PM on March 22 [1 favorite]

"the imminent doom of the world's most humane ..."

This is Europe you're talking about, right? Auschwitz, Treblinka, Sobibor, etc.?

OMG GODWIN
posted by mr_crash_davis at 8:59 PM on March 22

I'll remember that when I'm on my 5th week of paid holiday next week.

That puts you on track to take 25 weeks by the end of the year. That's pretty bad ass.
posted by Mr. President Dr. Steve Elvis America at 8:59 PM on March 22

Pastabagel wrote: "Dude, seriously, read the link: 'Please note that the index, calculated from PPS figures and expressed with respect to EU27 = 100, is intended for cross-country comparisons rather than for temporal comparisons.' You can't compare years with that chart."

If it is correct with regards to cross-country comparisons, it can be accurate with regards to relative changes temporally, otherwise it is not accurate in any sense. What that disclaimer is saying is that you can't say one economy grew by 6% because of a change in the number because it is a relative figure to the EU27 which is also changing -- the disclaimer is saying you can't derive individual country GDP growth rates from temporal comparisons, but I wasn't doing that. But using it as a relative comparison, you can say that the gap between the US and the EU has closed in a relative sense in the past two years by a projected 7%.

Pastabagel wrote: "I'm not exactly sure what your point in this thread is. Do you think this guy is right? I have stated clearly in this thread and countelss others that the situation is going to be unpleasant for Americans, but that does not mean it is going to be wonderful for everyone else in the world, nor does it mean the collapse of the American empire, whatever that is."

Countries rarely outright collapse and the US is too important for other countries to allow it to collapse, but we are witnessing a major world financial realignment that will have long-term ramifications for world power players as well as for the citizens of the US. It is overall going to be bad for the US, but it isn't going to result in anything near a total collapse. Thus we might be in general agreement. (I came back to MeFi after a year absence, thus I didn't catch your other posts.)
posted by bhouston at 9:03 PM on March 22

There is one person in this thread (plus IRFH) that has a fucking clue.

I think you probably meant two. Deriving this is left as an exercise to the reader.
posted by Mr. President Dr. Steve Elvis America at 9:06 PM on March 22

I reserve the right to blame Bush.
posted by cell divide at 9:09 PM on March 22

someone should invent a term for the desire of people to believe they live in dramatic, world-changing "end times," when the boring reality is that things will, in all likelihood, stay just about the same for the foreseeable future

they have - it's called "baby boomerism"
posted by pyramid termite at 9:12 PM on March 22

bhouston, could you please use italics when you're quoting someone else here? It's very distracting visually when someone doesn't use italics for quotes and then follows the chunk of quoted material with a chunk of their own text, disrupting the usual flow of conversation in the middle of an otherwise interesting exchange. Please reconsider your decision to use an idiosyncratic quoting style. Thanks.
posted by mediareport at 9:20 PM on March 22 [1 favorite]

Pastabagel, I realize now that my calculation on the relative difference between the US and EU PPP was wrong. The US was ahead of the EU 57% and now it is 45%, thus the gap has shrunk by 20% between the two economies which is a more significant figure that 7%.
posted by bhouston at 9:27 PM on March 22

crash - there is a barely visible sarcasm tag you missed.

BTW, the european genocide (if that's what you refer to) was 60+ years ago; the US genocide, 100+ years ago. When do we stop citing them for descendants to defend?
posted by dash_slot- at 9:35 PM on March 22

Mr. President Dr. Steve Elvis America: "I'll remember that when I'm on my 5th week of paid holiday next week.

That puts you on track to take 25 weeks by the end of the year. That's pretty bad ass."

Eh?

I'm not back at work till Tuesday, we have a 4 day weekend for Easter here, so I have plenty of time to figure out where your mathematics came from.
posted by dash_slot- at 9:37 PM on March 22

"there is a barely visible sarcasm tag you missed"

Must've been nested in < small > tags.
posted by mr_crash_davis at 9:50 PM on March 22

100 years ago?
posted by zixyer at 10:25 PM on March 22

"Some people believe that pirate politics is somehow about the right to obtain music and movies without paying"

Those people are incorrect, as pirates also want software and TV shows for free in addition to movies and music.
posted by aerotive at 10:33 PM on March 22 [4 favorites]

I take the view that the world economy is a dynamic system in constant change. Countries which are flexible and adaptable will survive and thrive, just like organisms in nature. Nothing in this thread has convinced me that the United State does not remain among the more flexible and advantaged economies on earth. This positions us well for long term survival and relative prosperity.
posted by humanfont at 10:47 PM on March 22 [1 favorite]

"There is one person in this thread (plus IRFH) that has a fucking clue. I'll refund your MeFiver, if you can identify them. The author of the linked article is a moron, just a stunning id10t. That is all. That is all its worth."

Thank you for your well thought out contribution to the discussion. One of your sentences was great, the others were terrible and indicative of a total lack of any comprehension skills. I'm not going to tell you which one. I'll leave it as an exercise to you, as I'm far too busy to discuss anything with you, I'll just tell whether you're right or wrong and leave the conceptual leg-work up to you. Not like I'm trying to foster discourse or anything.

Maybe you could try using your ability to argue reasonably based on the points of the argument, rather than just claiming outright that anyone who disagrees with you is an idiot, like most of the people in this thread seem to be doing. God forbid we actually discuss what has been said, rather than deciding abritarily whether it agrees with our perception of the world, then either embracing it and burning at the stake anyone who disagrees, or alternatively deciding that the person that wrote the article is an idiot, has nothing of merit to say within his argument, has flawed personal politics, hygeine, and is a bad neighbor.

Really people. I know this is metafilter but what happened to a little bit of decency, respect, and intellectual curiosity?
posted by Dillonlikescookies at 10:54 PM on March 22 [2 favorites]

Pirate party? Are you fucking kidding me? What's next the Robot, Ape, and Ninja coalition on how 2.4ghz radiation from wifi devices are causing autism?
posted by damn dirty ape at 11:15 PM on March 22 [5 favorites]

Hello, visitors from Metafilter. Summary in one paragraph: This is the leader of the Swedish Pirate Party.
posted by dhammond at 11:17 PM on March 22

That was so weird, 'cause I'm used to hearing spiels about how the government is bankrupt end with "...and that's why I'm not obligated to pay my taxes, your honor."
posted by Pope Guilty at 11:56 PM on March 22

Please excuse me while I laugh myself to tears, then weep myself into a severe alcoholic depression.

Here, let me buy you that drink with this credit card that I shall pay off with my economic stimulus package refund!
posted by mwhybark at 11:57 PM on March 22

self-Godwins count not, mcd, as you well know.
posted by mwhybark at 12:00 AM on March 23

Don't you hate it when unclever people, by flipping coins or reading goat entrails or listening to TV news or whatever it is the poor thick bastards do in the course of their information gathering, come to some of the same conclusions about some things that you do, and in the process get their greasy stupid juice all over the place, making you look similarly dim for thinking some of the same things?

I hate that.

The US will be irrelevant, in 15 years or 50 or, who fucking knows, 500. It is the way of things, and would seem to be and unsurprising conclusion from even the most cursory study of history. Empires don't last, things fall apart, the world changes.

I would be gleeful about the prospect, but I am even less enthusiastic about China calling the shots (to put it mildly), and I don't think Europe Resurgent is at all likely. Chances are, unless biotech gets as good as I hope it will in the next couple of decades, that I won't get a chance to see clearly the shape of the New Era anyway.
posted by stavrosthewonderchicken at 12:19 AM on March 23 [1 favorite]

Fun game to try for those of you following along at home: pretend the comments in this thread are in two columns; comments by Americans and comments by non-Americans. Watch, as though by magic, the pattern appear!
posted by blacklite at 12:26 AM on March 23 [9 favorites]

Ahh. No. I'm having trouble understanding the depth of ignorance it would take to believe the US will become irrelevant in the next 15 years, which is what this guy is saying. 15 years from now the United States will still have a navy stronger than all the navies of the rest of the world combined. It will still have an army capable of destroying any two or three other armies combined. It will still have thousands of nuclear warheads and intercontinental delivery systems. It will still have a significant, though much smaller, percentage of the world's economy.

This is a pipe dream. The level of economic collapse the United States would have to undergo in order to "go extinct as a superpower" and "become irrelevant" in the timespan he is speaking of would be stunning. Such a precipitous collapse would almost certainly take the world economy along with it it.

Irrelevance, as others have pointed out, comes less from a decline in military might, and more from the fact that the 'rest of the world' just might stop listening to you. Sure you can wave your superpower weapons at everyone, but how many countries will you invade as they begin to ignore what you say, state, sanction, insist or demand?

I take the view that the world economy is a dynamic system in constant change. Countries which are flexible and adaptable will survive and thrive, just like organisms in nature. Nothing in this thread has convinced me that the United State does not remain among the more flexible and advantaged economies on earth. This positions us well for long term survival and relative prosperity.

Well valid worldview and an appropriate one. The irony however is that world can observe the continued efforts using all that 'superpower' might and strength in order to continue to maintain the status quo for as long as possible - renewable energy sources anyone instead of rapidly decreasing stocks of a finite fuel?

Injections of funds to continue to bolster badly flawed financial systems can only continue for so long before the dam bursts.

Sure there may not be an ultimate collapse but the great depression wasn't that long ago either. And those are the terms being bandied about in such publications as the Independent and others.

"the largest most innovative economy" in the world is a term that the business media have been using consistently for the past few years even as the emperor's new clothes clearly display his nakedness.
posted by infini at 12:43 AM on March 23

The Collapse Gap - comparing the collapse of the USSR and an imaginary one in the USA, from the post linked to in the FPP.
posted by infini at 1:20 AM on March 23 [1 favorite]

Irrelevance, as others have pointed out, comes less from a decline in military might, and more from the fact that the 'rest of the world' just might stop listening to you. Sure you can wave your superpower weapons at everyone, but how many countries will you invade as they begin to ignore what you say, state, sanction, insist or demand?

Until something happens one way or another, this is pure speculation. There has never been such an imbalance in world military power as there is today. The US projects military power globally, and is the only country to do so. This is not something we really want to find out.

Sure there may not be an ultimate collapse but the great depression wasn't that long ago either.

No, and it was a worldwide depression that arguably was a major contributing cause of the Second World War. A depression caused by a collapse of the US financial system would likely be worldwide as well. If dollars become worthless, that will apply equally to those dollars held by foreign banks.
posted by me & my monkey at 1:59 AM on March 23

I wonder what is the cost of taking care of all those ICBMs?
posted by zouhair at 2:05 AM on March 23

Until something happens one way or another, this is pure speculation. There has never been such an imbalance in world military power as there is today. The US projects military power globally, and is the only country to do so. This is not something we really want to find out.

true.


btw, here's an interesting looking book by Fareed Zakaria that popped up, The Post American World.

"This is not a book about the decline of America, but rather about the rise of everyone else." So begins Fareed Zakaria's important new work on the era we are now entering. Following on the success of his best-selling The Future of Freedom, Zakaria describes with equal prescience a world in which the United States will no longer dominate the global economy, orchestrate geopolitics, or overwhelm cultures. He sees the "rise of the rest"—the growth of countries like China, India, Brazil, Russia, and many others—as the great story of our time, and one that will reshape the world. The tallest buildings, biggest dams, largest-selling movies, and most advanced cell phones are all being built outside the United States. This economic growth is producing political confidence, national pride, and potentially international problems. How should the United States understand and thrive in this rapidly changing international climate? What does it mean to live in a truly global era? Zakaria answers these questions with his customary lucidity, insight, and imagination.
posted by infini at 2:12 AM on March 23 [2 favorites]

I love the earnest way some of you are trying to rebut this.
posted by Phanx at 2:23 AM on March 23

Thing about economic collapses: they lead to discontented populations and open the way for extremists to gain power (cf. Hitler, Mussolini et al.). It might not be immediately apparent, and it could take a decade or more for the end result - Hitler took the better part of a decade in power to start the second World War - but still, the world as it stands has a vested interest in ensuring the US dollar doesn't immediately collapse, if only to avoid the volatility and chaos that accompanies a depression. So I'd be sceptical about what our Swedish pirate (arr!) has said.

That said, it's inevitable that a second or even third power will eventually rival the US, whether economically or militarily or what not - China? India? Maybe someone in the Middle East, if they decide to toss out the incompetents ruling them. That Islamic caliphate dreamt of by extremists could be formidable if it ever comes to be. And you might bomb your rivals back to the Stone Age, but there will be repercussions.
posted by WalterMitty at 2:29 AM on March 23

I tried to form a concise statement on global economics, but the topic is more than dissertation worthy, and the pirate party of Sweden isn't going to get me talking about the use of nuclear weapons.

The imminent irrelevancy of America is not an option. This, to me seems to be most easily seen simply by looking at a map. America picked one hell of a piece of land to start a fledgling experiment in capitalism. Knowing what natural resources lie within the borders on that map makes me feel secure. Not having my balls in the mortgage vice also helps.

We are due for a recession, and no it isn't going to come down to canned foods and shotguns. It means that there will be a higher prevalence of used luxury cars and houses in suburbia on the market.

I need to think this one over.
posted by clearly at 4:37 AM on March 23

Okay, so having a quick read of this thread, it becomes clear to me that wise people feel that nothing bad could ever, ever happen to America or it's economy in the long term because...?

?





?
posted by Jimbob at 4:45 AM on March 23 [4 favorites]

Pastabagel writes "the problem is the trade deficits."

A link to a Warren Buffet article, the jist being:

1. let's reinstate tariff!
2. let's do it so that they are formally neutral, not directly harming any specific industry , tradeable as if they were bonds
3. our exporters export $100 worth of good , they get $100 worth of import certificates
4. national exporters will sell the import certificates (IC) to international exporters wishing to sell to U.S. , at a premium and may reduce price of their goods
5. the international exporters gaining the most from exporting to US will be willing to pay more for IC , thus directing the market
6. by putting a short expiration date a limit to speculation is set

Clearly the cost will be passed to U.S. consumers, partially if not entirely, but WB argues that this will tie us import inexorably to us exports. But as us exports are significantly lower than its import , the international exporters would see a significant decrease of their export to u.s. and would, in theory, be encouraged to buy more U.S. goods or pay an higher price for them, if they wish to export to U.S. Alternatively, they could reduce their export to US. The deficit wouldn't increase, anyhow.

But then Warren also says

Carrying this plan out, our government could either auction "bonus" ICs every month or simply give them, say, to less-developed countries needing to increase their exports. The latter course would deliver a form of foreign aid likely to be particularly effective and appreciated.

There you go..unties the IC from actual good being produced by u.s., donates them to poor third world nations that having nothing but bananas to export will sell ICs to China , that will not pay them much, as they are worthless in some hands. That's government issuing trade deficit, something they may be compelled by u.s. importers to do if the exporters fail to produce goods worth being bought.
posted by elpapacito at 4:47 AM on March 23 [1 favorite]

Okay, so having a quick read of this thread, it becomes clear to me that wise people feel that nothing bad could ever, ever happen to America or it's economy in the long term because...?

Careful. You may not get into the very exclusive wink wind nod nod finger lick nipple rub smart people in this thread club.
posted by srboisvert at 4:51 AM on March 23 [1 favorite]

Yeh, pretty basic rehash of some of the better known arguments from what we call the "Doom & Gloom" school of bar stool economics. Author makes lots of "points", but doesn't follow through to explain their significance. Or lack thereof.

Which implies either a total lack of understanding of the topic at hand, or the author has a bias, a conclusion already in mind and is cherry picking factoids solely to support his hypothesis. I suspect the latter, as he must be a rather intelligent person (I was raised proper, and tend to believe the best about folks).

Disappointing, considering the high regard I generally hold pirates. Anyhow, ...


"At the start of the war, the gold coverage was 55%, which is healthy by modern bank standards. "

Uhhhm, where does this come from? Basel has banks set aside 8% capital to support positions, not 55%. And in fact most banks aggressively reduce from that 8% ceiling. So would 55% be considered "healty" by "modern bank standards"? No, before the shareholders could bitch and moan about underutilisied capital, you'd be out of business. A competitor would notice all that cash sitting about and make a hostile takeover.


"A fourfolding of the debt. A 300% increase. "

Ah, yes, another factoid. So what was the growth in US & global GDP during that period? 'Cause that puts this datum in perspective, and perhaps a 300% increase isn't so eye popping then - so the author choses to omit this comparison. And I find it curious that he's claiming a "300%" increase. Such a tidy sum across the horizon. Are we sure it's 300%, not 298%, or 305%? Maybe 1000%? Nobody knows, as he's pulled this number out of the air.


"To put this in context, in a list of global trade balances for 164 countries, the US is at the bottom of the list. The worst of all measured countries."

But why is this bad? Many economists believe that rising economic growth drives trade imbalances. In fact, I recall about ten years ago at Business School, our professor challenged us to outline an argument why the US running a (perhaps massive) trade imbalance with the rest of the world was inherently bad. We couldn't arrive at a position that would convince him, a Cambridge trained economist. So I guess The Pirate hasn't convinced me either.


Part III seems to be building a case against American IP more than some economic argument that I can follow. So I'll ignore it, except to note that while performing my due diligence, if I google on "Edmund Pratt" ACTN WIPO then Falkvinge's own page is the top hit.

Which seems to indicate this argument is more a single persons view than the broad, organised conspiracy taking place over decades that the author implies we've all been victimised by.


"The system is designed so that a certain percentage of people must go bankrupt."

I don't think so, in fact if one individual in that pyramid he's described were to go bankrupt everyone's confidence would be shaken. Who would then continue to participate in such a rigged system? Nobody that's who. And since we all - Pirates included, by the way - indeed do participate, we can only conclude this argument is false.


"In 2006, this household debt was $45 trillion, compared to $5 trillion in 1969. The money supply has been expanded ninefold."

Again, this factoid taken in isolation certainly is an impressive number, but we can't arrive at meaningful conclusions if this isn't in context. GDP during that term, for example?


"..but I'm betting my money that the money supply will reduce a good bit more than the 27% of 1929."

Fine, that's The Pirate's opinion and his alone (the view of other Pirates and those lacking critical thinking skills not included, of course). I'm also willing to bet that Bernanke and King (The Fed and BOE respectively) don't share it.

I actually agreed with some of the factoids in Part V, however the lack of a coherent structured argument disappointed. For example, The EU economy is definitely larger, but once again the author left out comparisons that would have (perhaps) detracted from his conclusion - specifically, the EU population is much larger than the US. So of course (as living standards are broadly the same across the two power blocks) European GDP is higher. No brainer.

Also The Pirate seems to have appropriate (in true Pirate fashion mind you), much of his superpower decline argment on Kennedy's The Rise and Fall of the Great Powers which was published in 1987. So no original thought here, and a poor job of building upon someone else's work.

Interesting as well is The Pirate's claim that "most" foreign exchange office have stopped accepting dollars.

The Wife and I keep a second flat in Amsterdam, and this is both false and unremarkable. Some of the smaller exchanges have indeed stopped (not "most") but they frequently run out of foreign currency. After all, their business is based on balancing currencies held in inventory, and an unforecasted influx of American tourists means they end up with too many dollars. So they stop for a short time. Happens all the time, and even so any ABN AMRO branch or larger currency exchange office will change your money.


"n China, exporters are complaining about the cost of currency insurance on trade deals signed in dollars, and are switching to the euro."

Well, I've got a small business importing MP3 players from China, and just last week did a deal. They still ask not for Euros, not Pound Sterling, but US dollars. Just my experience, but I haven't seen any change over four years of working with many mainland based dealers. All wire transfers converted to US Dollars, please.



"One prominent US economics professor recommends immediate investments in precious metals: "gold, silver, and copper-jacketed lead".

One wonders why this professor hasn't been quoted by name, as this would only add to the value of the arguement.

My advise as a part time academic: the student should resit all lectures before resubmitting his thesis.

Seriously though, I've been in this business a long time and, a point I've repeatedly made on MeFi, these things all go in and are about cycles. So there is an essence to The Pirates point, imperial overstretch, deficits, etc.

But just like after Vietnam, the US will get it together. There more than likely will be pain in the short and intermediate term, but The Fed, The ECB, The BOE and BOJ are on the case so I'm not particularly worried.

That being said, while I've still got equity and bond market exposure - haven't cashed out of any positions at all - I went long gold & silver back in 2004 and I'm still adding as cash flow and price corrections allow.

Take the long term view. The current situation is just a variation on a theme we've seen played out in the history of finance before. And just as the world didn't end then, this too, shall pass.
posted by Mutant at 5:18 AM on March 23 [2 favorites]

Irrelevance, as others have pointed out, comes less from a decline in military might, and more from the fact that the 'rest of the world' just might stop listening to you.

they don't have to overtly listen to us as long as they keep copying (or pirating) our lifestyle and culture

Sure you can wave your superpower weapons at everyone, but how many countries will you invade as they begin to ignore what you say, state, sanction, insist or demand?

how does "we're going to debase our currency and THEN pay you back and you can't do anything about it" fall into the description of things you can "begin to ignore"?

the scenario isn't "we make you do X" - it's "you can't make us do Y" - but keep misstating it if it makes you feel more in control

----

Well, I've got a small business importing MP3 players from China, and just last week did a deal. They still ask not for Euros, not Pound Sterling, but US dollars.

that's the other thing about this whole "the usa is going to be irrelevant" argument - china will have more to say about it than the europeans will

especially since they seem to be determined to keep their money roughly pegged to the dollar
posted by pyramid termite at 6:00 AM on March 23

There's a thing about Swedes, they do love to hate America. It's taught in schools (I'm serious - fellow Swedes may not recognize the indoctrination we went through but I saw it). Everything the US and its population does and says is bad, very very bad, until we do it ourselves. From sprawling malls, big SUV cars in inner cities and fast food restaurant franchises, to privatization of government owned businesses (telecom, ore mining, electricity), public transport and public housing and the eventual change in laws from "living rights" in your owned apartment to actual ownership (meaning I can rent it out whenever the hell I feel like it), to commercial subsidized TV channels and the types of shows we air on it, to the types of loans that banks give out these days and even such details as charging an entry fee for museums. All US inspired. All bad before we started doing it. I've never quite understood this way of thinking. The only thing we won't change I guess is lowering taxes to US levels.
posted by dabitch at 6:10 AM on March 23 [1 favorite]

by the way - if the u s is, or is going to be so irrelevant, why did mr swedish pirate party guy translate his screed into english? with american spelling?
posted by pyramid termite at 6:16 AM on March 23 [1 favorite]

That is indeed weird since we're not taught American english in schools here. We go the extra vowel UK route and use words like "petrol".
posted by dabitch at 6:21 AM on March 23

Just thought I'd add this in here. Table from the World Factbook for Debt as a % of GDP, with debt defined as Debt Outstanding + the present value of future obligations (most of which come in the form of pensions and healthcare)

Also the data is a bit screwy as it doesn't net out large cash positions or countries that have a nominal amount amount of debt outstanding for the purposes of maintaining an ongoing market in their government securities (See Norway and Australia respectively)
posted by JPD at 6:34 AM on March 23

Folks sometimes accuse me of being cynical, as I tend to question everything, but I can't help but wonder - and wish some Swede would chime in on this point - if this missive isn't the Pirate Party's attempt to become relevant again.

From what (little) I've read on the subject of Swedish politics, it seems as though the Pirate Party's main points have been subsumed into the positions of the other political partys.

So if I were lucky enough to be both a Swede and Green, why would I vote Pirate when my party had changed position? Curious that an author who repeatedly decries fascism repeatedly engages in what can only be called demagoguery - a fundamental tool of and technique employed by all fascists - in the article.

Just how relevant is The Pirate Party in Sweden today? Please correct if wrong, but they're not sitting in Parliament and seem to have garnered less than 4% of the popular vote. So is he just trying to broaden appeal, beyond The Pirate Party's constituent base? Seems likely.

Methinks Falkvinge shouldn't have selected global economics as an issue to raise his partys profile, as he hasn't demonstrated any knoweldge of the fundamentals, let alone real mastery or unique insight on this topic.
posted by Mutant at 6:35 AM on March 23

Pastabagel: The problem is not the debt, or the budget deficits, the problem is the trade deficits.

In another year, I'd agree. If you modified this statement to say "debt or budget deficits aren't necessarily bad, as they can simply reflect investment or some other useful activity" I would agree. But that's not what is driving this budget deficit.

humanfont: "I take the view that the world economy is a dynamic system in constant change. Countries which are flexible and adaptable will survive and thrive, just like organisms in nature. Nothing in this thread has convinced me that the United State does not remain among the more flexible and advantaged economies on earth."

"Flexibility" is important, but it is not a sufficient condition for prosperity. (Consider Somalia, for example.) But I do think you hit the nail on the head. The institutional features of an economy (that determine prosperity - not that anyone knows what they are) are probably a part of that dynamic system you're talking about. To me anyway, the fear isn't that GDP will plummet absent changes in the the institutional features of the US economy. The fear is that these features could unravel. Is the UK better at coming up with effective yet light-handed financial regulation? Is the idea of American entrepreneurialism and management acumen overblown? The US has steadily if slightly dropped points in Transparency International's corruption index.

I think this thread is just a Rorschach test. If you dislike Europe's inflexible labour markets and heavy regulations, then the US will rebound because its system is superior. If you dislike America's crude social programs and lack of economic mobility, then this is that overdue readjustment you've been waiting for. I don't think anyone has the vision right now to predict what will happen to the US economy at a more meaningful level. (Although I will say if you walk around a north american economics department these days, the possibility of a deep recession is taken very seriously. Not that those guys have a track record predicting anything, mind you.)
posted by ~ at 6:37 AM on March 23

Interesting as well is The Pirate's claim that "most" foreign exchange office have stopped accepting dollars.

The Wife and I keep a second flat in Amsterdam, and this is both false and unremarkable. Some of the smaller exchanges have indeed stopped (not "most") but they frequently run out of foreign currency. After all, their business is based on balancing currencies held in inventory, and an unforecasted influx of American tourists means they end up with too many dollars. So they stop for a short time. Happens all the time, and even so any ABN AMRO branch or larger currency exchange office will change your money.

Had trouble changing USD in London, Turin and Bristol this February. Had trouble even spending a US dollar at the airport's duty free shop - a place which would normally take USD as standard operating procedure. Heathrow coffee shops refused dollars, couldn't even give it away...

But yes, they accepted them gladly in Cape Town and Johannesburg
posted by infini at 6:53 AM on March 23

Just wanted to add that I spot checked that US published data against the Eurostat data here and the numbers are pretty similar. Just to push away any "The CIA is biased" argument.

Anyhoo, end of the day. the EU's Debt to GDP is significantly higher then the US'. Per Eurostat the Eurozone Debt/GDP is 68.6%, the US according to the US Dept of Treasury is 36.8%. Like I said, it appears the numbers are calculated in a similar fashion.
posted by JPD at 6:57 AM on March 23

Also. What I said 8834 what mutant said.
posted by ~ at 7:17 AM on March 23

Maybe it's a smear campaign against Pirates , who aren't pirates anyway. Copyright infringment not equal killing and looting, keep it in mind.

Anyhow, If I held any amount of x currency I would primarily be concerned about what I can buy tomorrow with that currency , that is to say its future purchasing power. Among the considerations there would be the possibility that I have to pay extra currency to have it accepted as a payment method. If china has such enormous reservers of currency and government titles in one denomination, one would expect them to try to diversify their investment in others, such as y currency.

Say that the chineses are worried about future purchasing power of USD , but can't really stop being paid in USD tomorrow or at all. If I where them, I'd probably offer a price if paid in euro and an higher price in dollars that I would slowly use to buy asset and money in euroland. Mhhh, and it looks that

1 USD = 7.05250 CNY
1 USD = 0.64743 EUR

therefore 0.64743 EUR = 7.05250 CNY --> 1 EUR = 10.8930 CNY = 1.54456 USD

So if you want long long love I'll ask you for eur 0.90 or USD 1.7 , as an incentive for you to pay me in euro. Which would suggest the sudden appreciation of euro, as it costs less to pay in euro then in dollar.

Then I think to myself, why don't I take advantage of weak dollah and go buy myself a schweet 500GB sata HD ? It turns out the shipping cost would eat most of the differential :(
posted by elpapacito at 7:18 AM on March 23

Poop. Worked in live preview. "Mutant said reasonable things."
posted by ~ at 7:18 AM on March 23

Heathrow coffee shops refused dollars

DeGaulle had no problem taking mine three weeks ago.
posted by me & my monkey at 7:19 AM on March 23

*shrugs helplessly*

who knows how these airports work? besides, the french... ;p

Whoever said above this thread is a Rorschach test is right, methinks. we don't know how this will play out, we do know however that things don't look that great. What worries me these days are the full page editorials in the Straits Times in Singapore articulating the reasons for the financial crisis and subtly trying to say 'nothing to worry about here folks'. ASEAN still remembers the Asian currency crisis of a decade ago, the scars have healed but not forgotten.
posted by infini at 7:25 AM on March 23

"Had trouble changing USD in London, Turin and Bristol this February. Had trouble even spending a US dollar at the airport's duty free shop - a place which would normally take USD as standard operating procedure. "

Sure, but as previously pointed out, this subjective experience proves absolutely nothing either way.

No currency exhange booth has an infinite supply of currency pairs. They will try to balance their holdings, so they're carrying an equal amount of US Dollars, Euros, any currency they work in. Otherwise they're taking a view on appreciation (or depreciation, depending upon their book) of a particular currency, and that's not any way to run a currency exchange business. More a currency trading business. And that's not the business we're talking about.

No, all currency exchanges make their money off the bid / ask spread, or a percentage charge. Those shops that proudly advertise "Commission free!" - they're making it off the bid / ask spread, and vice versa.

Even the larger banks will get their positions unbalanced sometimes. I've gone into Natwest on Bishopsgate in London, City Branch no less, and they've been out of Euros (pause for an obligatory comment about Natwest being a crappy High Street bank - Natwest is a crappy High Street bank).

As I mentioned, this happens all the time. Both unremarkable and commonplace. Not newsworthy, and hardly the evidence the Pirate Leader sought.


"Heathrow coffee shops refused dollars, couldn't even give it away..."

Yeh, shame that. Have Pounds with you next time, or use a credit card. After all, I wouldn't think of demanding a vendor in Ohare accept my Pounds for a cup of coffee. That being said, I wouldn't even dream of asking, but I have seen Americans in Central London, (Marco Pierre White's Criterion, a really nice restaurant) insist they be allowed to pay in dollars, so there you go.


"But yes, they accepted them gladly in Cape Town and Johannesburg"

I've spent a lot of time on the ground in Africa, and there's an expression down there - "The only thing that speaks louder than a gun in Africa is an American dollar".

I used to travel with about $5K or so in American one hundred dollar bills hidden on my person. I won't be dramatic and say they saved my life, but they did get me out of more than one nasty situation, guns drawn and pointed at me, frowning black men tossing my property all over the place while complaining loudly about "a big problem", mean looking dogs barking, tugging - no, REALLY tugging! - their leashes, just BEGGING for a taste of this all American, white boys ass.

I don't doubt you had any problems at all getting rid of American money down there.
posted by Mutant at 7:47 AM on March 23

In addition to the criticisms set forth above, I want to add the following:

Oh, and you've heard about the crash of 1929? The crash which everybody talked about as the worst in history? That crash saw a mere 27% reduction in the money supply. Compare this with the fact that if the US is forced into going back to a pre-1971, pre-bubble economy, we'll see an 89% reduction in the money supply.

The important difference between our current economy and the economy circa 1929 is the existence of a number of strong, central regulatory authorities born of the New Deal. They allow for a more coherent, unified, organized response to changing economic circumstances. They also didn't exist at the onset of the Great Depression.

Furthermore, there was more behind the great crash than a "27% reduction in the money supply." Given the total ineffectiveness of the Blue Sky laws in regulating securities, investor confidence took a far harder hit than the "money supply." So liquidity, or the lack thereof, was hardly the whole story, since even the extant limited supply of money wasn't being invested.

Of course, investor confidence isn't astronomical now, either. But as we've seen from the small number of huge short-term gains in the Dow and S & P, those central regulatory authorities discussed earlier have at least some ability to address investor confidence issues.
posted by Law Talkin' Guy at 7:48 AM on March 23

"I don't doubt you had any problems at all getting rid of American money down there."

Wow that's awkward, I do apologise ... how about

"I'd be surprised if you had any problems at all getting rid of American money down there."
posted by Mutant at 7:49 AM on March 23

Pardon my lateness and general skeptical butt-holedness..

Validity of Pirate Captain Rick's theories aside, I believe the article reflects an attempt by the pirate party to change the dialog on their issue. They want to move away from talking about 'how will musicians get paid?' and change to 'freedom from fascism!'.

This essay is Rick's current grand theory of everything and why you shouldn't listen to Yankee's telling you what you can download off the Internet. In that he probably isn't wrong.
posted by Leonard at 9:32 AM on March 23

But that's ridiculous. People do not download the latest movies or albums off the internet because they're striking a blow for freedom. They just don't. They download the stuff because they want it and they don't want to pay for it.

That's not a noble act of self sacrifice. It's a selfish act of GIMME STUFF.

He can try to polish that turd all he wants, it's still a turd.
posted by Justinian at 11:33 AM on March 23

Any comparison involving US and EU GDP is mostly meaningless, since the US went creative in GDP calculations a few years ago.
posted by vivelame at 11:50 AM on March 23

Justinian "They download the stuff because they want it and they don't want to pay for it." -- Or they can pay for it, and don't have the moral integrity to resist what they perceive as an easy score.

I grew up in a very rural part of New York State, very close to the Canadian border, a small town ("incorporate township" actually) population 40. This was by no stretch a Mayberry, no local cops but we did have State Troopers who were (and probably still are) a law unto themselves.

One day my little brother and I were out in a local farmers field, being assholes like only ten years can - smashing pumpkins.

I picked up a particularly large pumpkin and excitedly told my brother "Watch this!". I remember my little brother saying "Uh Oh!" and turned around.

I was facing this MOUNTAIN OF A MAN, a State Trooper, car idling behind him, mirrored sunglasses and all, very stereotypical, who asked of me one question -- "BOY WHAT THE HELL ARE YOU DOING?" The cars radio squawked in the background.

"Uh, uhmmm, we, uhh, nothing ..." I remember stammering.

"DON'T YOU EVER LIE TO ME AGAIN BOY!!" he thundered.

I woke up maybe a minute later to see the State Troopers car speeding away, partially covered by a cloud of dust. My mouth was bleeding. I asked my little brother, who was helping me up, what happened?

Apparently as soon as I'd lied he straight out punched me in the face and drove off. Now I don't know what become of him, where he is, or anything else about him. But I would like to thank the gentleman.

Because I never wanted to see that State Trooper again as long as I lived, and changed my behaviour accordingly.

Some folks just gotta be smacked - hard - before they get how the game is played.

I did, and it made me a better person.
posted by Mutant at 12:08 PM on March 23 [1 favorite]

I agree with Mutant: The only way to effectively solve this problem once and for all is with brazen and unmitigated cowardice. Therefore, I hereby demand that every State Trooper beat a ten-year-old unconscious and drive off.
posted by Sys Rq at 12:22 PM on March 23 [2 favorites]

Mutant: My mouth was bleeding. I asked my little brother, who was helping me up, what happened?

Apparently as soon as I'd lied he straight out punched me in the face and drove off. Now I don't know what become of him, where he is, or anything else about him. But I would like to thank the gentleman.

Because I never wanted to see that State Trooper again as long as I lived, and changed my behaviour accordingly.

Some folks just gotta be smacked - hard - before they get how the game is played.

I did, and it made me a better person."

Well and good, it worked for you an'all. Shit! I wish that licensed thug hadn't hurt you, man. For what - petty vandalism and lying? Wouldn't taking you back home to be dealt with by mum & dad have scared you? How did you explain the split lip to your mum?

I wonder if it worked for all the other 10 year olds that bastard ever hit? I'm sure you aren't advocating his actions as right per se, so what is the point of telling us? That your moral code is 'might is right'?
posted by dash_slot- at 12:24 PM on March 23

Has everyone forgotten about the collapse of the Soviet Union in this thread? The various countries that made up the Soviet Union had all the guns and bombs and planes and nukes after the collapse that they did before, but they suddenly lacked the money to operate them or the political will to use them.

Imagining that a post collapse US Armed Forces will still be useful as an instrument of policy hell, imagining it as anything other than a shambling rusty hulk is idiocy.

As for the "What could they do if we refuse to pay them back", 'they' meaning the rest of the world, could ad would refuse to sell the US anything not paid for in advance. Sure, this'd cause allot of pain in the rest of the world, but in the US with a deflated currency and an almost entirely hollow manufacturing center. It'd mean many consumer goods would simply become unavailable. For a hint of what that'd look like, try to spend a month not buying anything that wasn't made *entirely* in the US from *entirely* US made parts and materials.

None of this is to say I agree that the US is going to collapse any time soon, I just think some of thee proposed responses are a little glib and unrealistic as well.
posted by Grimgrin at 12:38 PM on March 23 [1 favorite]

I had a dream. In it, Barack Obama, thoroughly disgusted the idiocy that is the Democratic party, says "fuck it" and bails. McCain goes on to win the election. Obama moves to Canada.

Told to bomb Iran, the US military decides "fuck it" and bails. Obama convinces them to join Canada, where they'll see use as a peace-keeping force that is used sensibly around the world.

The US West Coast, Alaska, and a large part of the upper East Coast decides "fuck it" and bails on the USA. We all cede our unions and derive a new union, with a wholly modern, socially liberal, fiscally conservative government with a balanced power structure and very marked limits on the powers of the Prime Minister and excellent balance between the social and fiscal representatives of the nation.

Canada becomes the biggest country in the world by far, with by far the world's best constitution and government system, abundant natural resources, a huge brain trust, a fantastic peace-keeping military, world respect, and unicorns and rainbows in every home.
posted by five fresh fish at 12:50 PM on March 23 [2 favorites]

dash_slot- -- "Wouldn't taking you back home to be dealt with by mum & dad have scared you?"

No, actually I'm White Trash; they weren't around much and little brother and I spent a lot of time running away from home, blah, blah, blah. So even if they were about when he brought us home, I'm not so sure they would have given a shit more than just wishing he'd leave so they could get back to business. Which, by the way, was mostly drinking.


"...petty vandalism... "

Well, that (petty) is really in the eye of the beholder, and I haven't passed along enough information for anyone to make this judgment. And I don't know the scale of that farmers operations. Petty? Maybe so. But he might have been barely above the subsistence level, and my (our) actions - smashing pumpkins for several hours, not the first time either - were pushing him under. Out of business. To bankruptcy. I don't know, and I was there.


"...so what is the point of telling us? "

As per my post, and the other side of Justinian's dichotomoy ; perhaps many of the folks downloading stuff can indeed pay, but chose not to. Nothing more than that really.

And no, I'm certainly not advocating that all ten years old get physically beaten up. Those were different times, rural America, the mid 1960's. It was just the way things were done back then. And while there are other ways to get the same message across, this worked for me back then. But it doesn't change the underlying lesson nor the key point we were discussing : not all folks steal just because they can't pay. Some people steal because they can steal without ramifications.

As I mentioned, I never wanted to see that State Trooper again in my life.
posted by Mutant at 12:54 PM on March 23

I think this guy's on the money in every particular, except that he seriously underestimates the American military's power; as a policy tool, and as an instrument to protect American interests in the face of a lot of non-military threats.

The world is headed for shitty times, and so when I say there's probably never been a better time to be an American, my tongue is only halfway into my cheek.
posted by ikkyu2 at 3:22 PM on March 23

I always love it when Americans, who can't seem to run economies in ways that create paid time off, prophesy the imminent doom of the world's most humane and progressive economy.

...

I'll remember that when I'm on my 5th week of paid holiday next week.

It's funny, last time I was in France nearly every single serviceperson mentioned that to me as well. I didn't have the heart to tell them I get more vacation than they do.

If we're going to whip out our holiday dongs...

I work full-time in the U.S (supposedly 40 hours, but more like 30 cuz I'm lazy and I've had 5 different bosses in the past year) and got 44 days of paid holiday last year. Throw in "sick" days and it's closer to 50, plus another 5-6 sick days I didn't even use (cuz I'm a "reliable" employee).

That's 5 weeks and 4 days of paid holiday. Combine that with $10/mo. for adequate health care coverage, and there's no way I'm getting out of my fluorescent cube alive.
posted by mrgrimm at 4:19 PM on March 23

Slacker!
posted by dash_slot- at 4:24 PM on March 23

That's 5 weeks and 4 days of paid holiday.

Well, I'm in Korea and I get a massive 16 days per year leave (plus national holidays).

Then again, when I was teaching at a university here, I used to get 16 paid weeks off per year. Then again again, I only actually have 8 contact teaching hours a week now at KoreaMegaCorp, and make twice what I did as a professor (not even including stock options and benefits). I'd rather be socking away money for retirement than being the slacker I am by nature, so I'm not unhappy with it.
posted by stavrosthewonderchicken at