How long before the economy collapses?

[Wiglaf]

Banks run the government. Debt is good for banks. Don't expect it to EVER go away.

[gwb72tii]

so you are saying not to worry because the government is saying not to worry? Am i reading this right?

I agree numbers one and two are unlikely I also agree that number three (printing money) is most likely as its whats happening now...where does this road lead?

this is why there is ample reason to worry, and why the markets are on borrowed time

1. bernanke and his co-conspirators in europe/japan have distorted risk levels in financial assets. markets are not trading on economic fundamentals, they are trading on zero interest rates and increased money supply. he has forced people who otherwise would never consider owning risky assets (stocks) into the market to replace CD's that pay zero.
2. printing money is inflationary historically, or with japan, deflationary. neither is good. execss money supply will have to be withdrawn which has hstorically been bad for the economy. either way, ben has taken us where we've never been before on the mistaken belief that keynesian economics actually produces something other than excessive debt. keynesian economics has never worked, ever.
3. the euro mess has not been resolved. it has been kicked down the road. it will have to be addressed at some point. the next big thing (other than italy today and spain) will be france. france is the next greece by the tail end of 2014. there is no conceivable way france can balance their budget under almost any scenario and will be forced into the ESM and need to be bailed out, ala greece etc. france is europe's 2nd largest economy. that on top of spain having no ability under ANY scenario of repaying their debt. yet the world thinks spanish 10yr government bonds should only yield 4.75% based on the promise fo unlimited support my the European Central bank (money printing). unbelievable.
4. japan has a >200% debt to GDP ratio. they have an aged population that doesn't want to buy japanese bonds any longer. Abe wants inflation of 2-3% in japan and if he gets it japanese gov't bonds yields will have to rise. if they go over 2.5%, every penny collected by the japanese government will have to go to interest payments on the debt. every penny. this is, in part, why japan has been called "a bug in search of a windshield".

sleep tight. obama says excess debt is nothing to worry about.

[gwb72tii]

for anyone who is interested, links to really bright, thoughtful people on what is facing the USA and the world

make up your own minds

fwiw

1. http://www.bloomberg.com/video/druck...EcPKIbXJw.html

i particularly like the interview from minute 21 about the youth of the USA
btw - i'm in love with the interviewer

2. the head of PIMCO on the "rotation" out of bonds into stocks and how the fed has distorted assets values

http://watch.bnn.ca/#clip882978

3. Jeremy Grantham, head of GMO that manages 180 billion. some have called him a "perma bear" but is very smart man - long interview

http://www.charlierose.com/view/interview/12812

[Q5Quint]

People are building tons of stuff again in the housing markets.... so I am good for another while. Why people were paying 400k for a 120k shitbrick house is still beyond me. Everybody is greedy and everybody wants a cut. Life goes on.

I think next year I am renting out my place and living in a tent to save some $$. I can make what a feller at minimum wage makes by NOT living in my house! haha! Suck it capitalism!

[Wiglaf]

hey now, brick houses are expensive. and built to last. vinyl siding can eat my ass.