Economic Meltdown or Economic War?

[percussivemadness]

So like many I have been monitoring the markets for the last few months. I have a good understanding of how these things work having been involved in the London markets in 1987 (I left immediately afterwards, couldn`t handle the dishonesty).

However I digress. This weekend my good wife and I went out to look for a new home. We went to 4 homebuilders, only to find out that 2 had sold out of all their homes in the last 2 months (huge developments), one had sold 250 houses in 6 weeks (average price 400k) and the ones we really wanted, had sold 20 lots in about a week. Hmmm I thought. Called a realtor to see what we could expect for our small 1500 sq ft house, was told about 215,000, expect to sell pretty quickly.

I`m English, I choose to live in America because I love it here. However, in my research I discovered that in England in 1992 the pound apparently was devalued (I never noticed it, and neither did any of the people who were around me at the time). My dad recently came over, first ever visit to America. He said something to me that I have repeated to many people, "Something isn`t adding up".My dad is 72, still works, not because he has to, but because he wants to. I have disagreed with him on many things, but one thing I have started to appreciate is, that when I was 20 I thought my parents knew nothing, as I get older I am amazed at how much they actually know.

For the last 3 months I have been trying to work out what isn`t adding up. I said in a thread around about August time, oil would be down to under 75 a barrel by March. It appears my prediction is on track. Therefore, why? We as a people focus on the distraction rather than the magician. Have we all done the same for this crisis. We assume the economy is melting down, when the reality is, it doesn`t appear to be.

So, what actually is going on. In 1972, when the US was again in "meltdown", you guys pulled the masterstroke which resulted in the "dollar hegemony". However, in recent years, that has been under threat with the rise of the Euro. Hmmm. The European Union, hated by the Irish and the British. In fact the recent vote by the proud Irish has seriously dented the strength of the EU (You can always rely on the Irish to be brave). Going back if I may to my dad, who has said over and over again, the EU is simply Hitler supporters trying again, and we all know Dumbya`s family connections to the mr Hitler don`t we? If the EU loses say England, Germany or France, which if the economy of either of those countries melts down, which will inevitably happen, and knowing many people in all of those countries, then not only will the EU collapse, but so will the Euro. America has helped the Europeans more times than I can remember, are we actually seeing a time that historians will look back on and call the Third World War where again America not only saved Europe from a Nazi takeover, but also herself? I am not a believer in conspiracy theory, I am a believer in coincidence theory. The Irish voted no on June 13, look at what has happened since then.

If the Euro collapses, and I think it is very close at this point,you will see a flight back into the dollar of unimaginable expediency.As the dollar strengthens, oil falls further and slowly the economy will revive.

I don`t know if I am completely mad :)However, I remember saying to a good American friend of mine way back in February, one thing I as a non-American have come to appreciate is the amazing resilience of the American people and I marvel at their ingenuity and decency. Are we witnessing an economic war, that if I had to bet on who will win, my money is on the Americans.

I just had to get that out of my system.

[villager]

1. you're quite generous to call us "decent" after all we've put the world through...

Still, perhaps that buried, stifled spirit is beginning to resurface, at last....

[percussivemadness]

3. nothing in my time in America leads to me to any other conclusion

I think the same fascist forces that have decimated Europe in recent years (i.e people looking through your trash cans and fining you) have tried to do it to America over the last 8 years.

My belief has always been that the American public was inherently decent, its just that whereas in the UK, it takes you 10 hours to drive from one end to the other, as such, social response tends to be a little quicker than over here. However, once America wakes up, and we are seeing that now, then there will be all hell to pay. Look at Dumbya, he is one scared man. We assume it is because of the economic crisis, but what if he realises just like Hitler did in his bunker, that its over, and he and his criminal gang of fascist thugs are going to pay the piper very soon?

[dipsydoodle]

2. The 1992 issue

was currency speculation. The strength of the dollar and the US ecomy since 1972 is mainly due to petrodollar recycling - think so anyway.

[kurt_cagle]

4. Euro Collapse

This has a number of fairly unpleasant consequences though. If Europe is in fact falling into a harder recession (depression?) than the US, then a strengthening dollar is going to hurt US exports at a time when manufacturing is suffering badly, and US imports of European goods will likely be down because the US consumer can't get access to the credit markets to buy those European goods that are at lower prices. The Fed is basically making out IOUs at an astonishing rate, but I honestly can't see where this money is going to come from, and the Chinese markets at this point are down dramatically (to the extent that they're still idling all those factories that they temporarily closed for the Olympics).

It does explain the current US dollar strength - reflex moves toward US T-Bills as a safe hedge. What I can't figure out is why gold isn't just skyrocketing right now. Demand is there - you can't get US gold, Canadian gold is stretched, and South African krugerands are becoming difficult to find, yet the prices have remained at around the $900 mark for months.

[percussivemadness]

5. If the EU collapses, which needs to happen IMHO

I`m not so sure this will be a bad thing for the USA. If the dollar rises in value, then US dollars will fund a European manufacturing revival, lets face it, would you rather be buying your stuff from Europe or China?

As for gold, if the dollar rises in value, gold will not be seen as a good hedge and prices won`t rise. I think this is the biggest indicator of what is going on. I agree with you, gold should be going through the roof, it isn`t, so something else is afoot that indicates a strong dollar.

Plus, whilst the boffins at FR claim the market is reacting to an almost certain Obama presidency, again the lack of a surge in gold prices would indicate that the market is moving back to dollars because they have seen that Obama`s economic plan to actually has far better long term implications for the dollar than the non-existent economic policies of Insane and Winky. They miss this point naturally, focusing on the stock market, which although down by 500 points today, could easily rise tomorrow. Plus, the stock market is overvalued, as such, it had to come down some time. Rather now than say in Nov.

[Geek_Girl]

6. It's strange I was thinking the same thing today about the Euro

After reading this and other articles like it

http://money.cnn.com/2008/10/06/markets/thebuzz/index.htm?postversion=2008100612

It seems individual European countries are taking matters in their own hands as opposed to a Unified Euro solution in their economic recovery.

I think that is the root of why the US market today is dropping. I'm not sure what it all means but I'm starting to wonder if this is the beginning of the end of the Euro.

[percussivemadness]

7. All I can do is tell you what ordinary Europeans think

My dad calls it facism. Pure and simple. My aunt has campaigned in Ireland for years against the European Union, warning that the EU is not a benevolent thing in any way. Tony B.liar was a proponent of this, and obviously Bush and Blair were the closest of allies, therefore logically, they had the same agenda.

Whilst the french govt has supported the EU, the ordinary french people have resisted it. The Irish effectively declared war on the EU when they voted it down in June. We don`t see it as a war because armies aren`t involved. However, war it is.

Peter Mandelson, one of the biggest architects of England`s capitulation to Brussels has suddenly been restored to Gordon Brown`s government. There is a huge populace revolt against the EU building in the UK.

The EU`s days are numbered, and with it the Euro. People are waking up and as in the movie V for Vendetta, the demise will start in London.

[Geek_Girl]

8. That's interesting

Thank you for the insight

[leftofthedial]

9. there is no war but the class war