=========
I need some research help with this, as I am still debugging the collapse
model and its causes and aftereffects.
=========
Date: 04 JUNE 2008 v7
== One way the American governmental finance system can collapse ==
The US < > NZ ANZAC Treaty relation****p has essentially evolved into the
US
trying to bully a small nation (NZ) into obeying an obscure and
unim****tant
directive within the US military theology: the need to carry nuclear
weapons
around the territorial waters and ****ts of nations that have no
infrastructure to prevent the theft of such weapons.
There is no proof that this US military 'theological viewpoint' has any
meaning or strategic value in the South Pacific region. NZ has decided by
itself that this theological premise helps 'not a single person' to be any
safer inside or outside of NZ. NZ's decision should be allowed to stand,
as
it has no ideological or theological basis. All successful longstanding
tactical decisions have no ideological or theological basis - that is why
the decisions are successful.
Bully nations generally become fat and lazy, and clearly soon become
incapable of taking care of themselves. The US has clearly demonstrated
that
this is the case in recent years.
The macrosocioeconomic pattern of the US not being able to take care of
itself has been obvious since the end of the Cold War, but this kind of
deep
seated structural failure takes time to evolve and become de facto
irreversible.
The bigger they are the harder they fall...
The collapse:
This predicted US economic collapse is really rather simple to see if you
are aware of the nature of the US society and the way its finance system
works. It will take a perfect storm of cir***stances in order for the
collapse to happen.
These macroeconomic cir***stances are "locked and loaded" right now as it
were. Like La Palma (in the Canaries) falling into the sea, it could
happen
tomorrow or 10000 years (er days) from now. At this point it is up to
nature.
All of what you may read below is no more than a series of observations of
nature. I am not [by any means] an economist. However, economists can
observe nature in the same ways and shed more light on these observations.
Basic Assumptions
1. It takes the interaction of two entities in the realm of finance to
allow
the interaction to take place. This is the "ignition catalyst assumption."
What entity in the US has power and influence over great deals of money?
Government entities
-- Federal government (not applicable in the following analysis except as
a
'quote on quote' regulator of the us banking and finance system)
-- State governments (50 of them, plus overseas colonies like Guam,
etc..),
primary players in the drama to follow but that also can regulate many
aspects of the banking and finance system
-- Local government: municipalities, sewer districts, water districts,
school districts ... the unregulated entities bathing in at least 100
years
of endemic corruption and part one of the problems to come ...
What entities are most immune (in the general sense) from investing in
risky
and otherwise unsupervised and unregulated derivatives? The Federal and
State Governments. The federal and state governments in the US tend to
operate using different kinds of corruption due to the level of oversight
existent at their level of power and influence.
All other levels of government are subject to the problem of financial
investment regulation. Don't let the existence of US Sovereign Wealth
Funds
fool you as these funds operate at the County, State and Federal Levels.
Counties have a slightly lower risk level for investment meltdowns due to
the long term after effects of Orange County losing 1 billion dollars over
a
series of simple derivative investments. I am not saying that 100% of
America's counties are immune from this problem happening again.
An im****tant fact about US governmental organization: each household in
the
US is subject to multiple taxation via multiple layers of government. This
is partly caused by the vast size of the US. However, the lowest levels of
government are the most poorly organized. The layering and structuring at
the local level is either redundant or chaotic.
Both Wa****ngton State and California have had statewide referendums that
have passed that have forbidden tax increases greater than the rate of
inflation or less. All of these referendums have been rendered null and
void
(or merely totally useless) because of there being so many levels of local
government that could at any time raise taxes. Each level or layer of
government has to be fed by tax money.
I have no standardized nationwide number to go by, but the average
household
pays taxes to a minimum of 5 layers of local government in the most remote
and underpopulated regions. In some suburban centers it is easy to have 11
to 14 layers of government wanting tax dollars. Separate water and sewer
and
garbage disposal districts is one classic example.
It is more likely that smaller government entities (that are more
inherently
corrupt with endemic multi generational nepotism and favoritism coupled to
systems of kickbacks have existed endemically in the US for the past 125
years.
The layer problem is a suburban problem, not a rural or urban one. Urban
areas like Seattle or Chicago have merged many related functions like
sewage, water and garbage into the city finance structure. Major cities
have
city expenditures under fairly close surveillance, but this does not
affect
school districts that more or less exist unsupervised except via the
federal
government.
Note:
There is a view held by many economists that the US banking system is a
'command' based finance system. The USSR historically had a 'command
economy' but not a command finance system. The USSR in the form of Russia
is
recovering reasonably quickly from a total collapse of the economy of the
USSR. No one has ever seen a command finance system collapse separate from
that of NATZI Germany or maybe Iraq in 2002. These examples are far from
ideal or accurate considering the nature of the US economy. It is clear
that
Iraq and Germany had command finance and economic systems at the time of
military defeat. The collapse of the US economy in the 1930s was when a
latent gold / silver standard existed, but any collapse in the modern era
would not take place under these 1930s style macroeconomic conditions.
Private sector
-- Investment banks, as they only accept customers with money and
government
entities that possess nearly unlimited money. The investment processes
around this "public money" and are not tightly supervised.
-- Hedge funds, as they are allowed to make not only unsupervised (via
SEC)
investments, but also make unsupervised trades (types of investment
instrument trades that were essentially outlawed in the 1930s).
There is not that much one can say about the private sector being involved
in this rather predictable collapse. The private sector in the US, where
the
jobs pay adequately well is raft full of employees that have gotten their
jobs via some back end nepotism in government via other relatives. There
is
a very large share of favoritism playing its hand in the private sector.
One could argue that many industrial parts of the US private sector
economy
are no more than puppets of the public sector, in terms of regulation.
This
is not too different from the former Socialist world of the USSR ... but
nature in this case is much weirder.
US private sector companies in the finance sector are mostly insipid
puppets
of the public sector, but for reasons not having that much to do with
issues
of regulation per se. The US finance sector (depending on what part of the
finance sector one is talking about) can be as regulated as if the private
company is essentially stepping in for government with respect to doing
some
private sector tasks in the economy. In many societies what is
accomplished
by government varies greatly, as it is a good idea for the government to
do
some tasks (like make steel for example, or provide a rail service) in
some
societies that in other societies may have been accomplished by purely
private entities (US Steel, BNSF Rail).
Nevertheless, in this case one could literally and correctly argue that
the
US government here is the agent of 'the demise of its own power and
sovereignty' with the private capitol markets being the entity that
ultimately accomplishes the destruction of sovereignty by wildly altering
the basic economics of the household.
Note:
Hedge funds are very similar in nature and regulation to 1930s syndicates
and other related named financial institutions at the time.
Backdating of trades (via investment banks and hedge funds) costs the US
economy some 100 billion per year, according to at least one set of
economic
research calculations with the baseline for this number being 30 billion
per
year. Using the same constant dollars try to imagine the 'sum of the cost
backdating' since 1975. The backdating of sharmarket and mutual fund
market
trades has been permitted since [I assume] 1965, but pervasive since 1975
in
the US finance system. I assume that in Australia the ACCC would never
ever
permit this to happen, because of the market distortions it creates.
The Orange County billion dollar derivative loss, based on a single line
derivative is my first data points. A few Australian municipalities have
had
some new red ink introduced to their books due to Australia's increase in
marginal mortgages from 2007 onwards.
Mutual funds (aka pension fund too), that are reasonably well regulated
will
have their asset holdings blown away by some aspects of this finance
system
collapse, separate from the 'peak oil' effects of decades long recession.
One can expect mutual funds to lose up to 66% of their current base value,
but the losses may be up to 90% in some cases. A few rare mutual funds
that
are run in unusual ways based on unusual economic precepts will have
losses
in the 5% to 25% range: there is no way of predicting in future what and
where these funds will be.
2. A similar set of derivative transactions will have to be made smaller
government entities in the US with a leverage of 1:100 or 1:1000. I call
this the "primary ignition condition".
One can assume that entities smaller than counties will be making the
transactions, due to the aftereffects of the Orange County billion dollar
loss on derivatives. This may as part of my postulate not be true at all,
but for most of the US it will probably be true.
These derivative purchases will have to be made corruptly, as without
corruption the transactions could never and would never be made in the
fist
place.
-- Nepotism will be the preferred transaction method in Democrat leaning
regions.
-- Favoritism will be more common in transactions in Republican leaning
regions.
-- Kickbacks will to be involved in all political regions.
-- Probably not a single one of these derivative transactions will take
place without a kickback (and hiring each other's private or public sector
relatives in exchange for the transactions being made will be mandatory).
Universally: the transactions [of these wildly unrelated extremely
leveraged
derivatives] will be made in small numbers over a long time frame as a
series of small transactions by the smaller government entities. Yet the
total of these small transactions will yield some truly astoni****ng
expenditure numbers. Local government in the US has money, and plenty of
it
to spend corruptly without supervision.
When and how it will happen?
I don't know how the excessively levered derivatives will be created. It
does not require any plotting and planning to create more harmful
derivatives than the ones that currently exist that most government
entities
already own.
You don't need any kind of centralized conspiracy to happen here, just a
total lack of supervision of a large scale financial sector in the US
economy. Economies work by 'the actions of multiple unseen hands' as Adam
Smith says, so I will let his analogy stand as it is applicable to this
evolution of the US economy.
I suppose that several US investment banks and hedge funds could create
dangerously explosive derivatives by accident [as this is how it usually
happens with fiscal meltdowns in the US].
One could suppose that these largely unregulated economic finance
institutions could quickly come to the conclusion that 'in order for the
company to be saved from oblivion' these aforementioned 'implosive
financial
instruments' must be 'sold immediately to whomever or whatever will buy
them' to avoid the company that created from becoming 'worth less than a
candystore lolly'.
Consumers will not be able to buy these dodgey 'derivative' finance
instruments as consumers don't have any money due to the nature of the US
economy. Oddly, the price of oil plays no substantial nor substantive
overall part in US consumers not having any money to spend (spending =
investing here) on these finance instruments in the bigger overall
macroeconomic nature of the US economy.
Bear Starns at the time of its dissolution was worth about $1000 NZD, but
the sale transaction was doctored to save the dignity of CEOs [and that
part
of the US finance sector].
This ex****tation of risk is common in the US finance sector. Thus the
suggestion of this risk ex****tation happening via the government sector
being turned into a sinkhole for bad derivatives is totally unremarkable.
This risk ex****tation scenario may be currently happening as I write --
but
it might not not happen at all. I cannot know the unknowable. What is
im****tant is that this risk ex****tation scenario could happen.
Any dodgey financial instrument can be hidden inside a seemingly safe
financial instrument. The [2006 - present] US morgue finance mess has
proven
that this derivative hiding trick can truly backfire at a macroeconomic
scale.
Local government bureaucrats in the US (that mostly came to their posts
exclusively by nepotism and favoritism) are not trained (nor necessarily
even interested) to know the difference between a terrible investment or a
bad investment much less a good investment. Their job is job security, as
permanence is power. If bad local government investments result in
millions
losing their homes due to extremely high local council rates, these folk
don't care.
Local government bureaucrats pensions' as well as job security will not be
affected or effected in any way whatsoever regardless of how totally
insolvent the local government is. On top of this "Iron Ricebowl factor"
[or
social consideration] is the additional fact that the future local
government jobs and pensions of the relatives of people currently in power
will not be affected.
No matter how vastly hypertitantic the economic meltdown, there has been
and
will always be perpetual lifelong job security for local government
bureaucrats in the USA. In the USA local government is corruption and
corruption is local government.
It is this way because ordinary Americans want it this way. Americans
cannot
cope with America being run in any other way. This is not because of the
inherent nature of local government in the US, the problems of local
government are universal.
If it makes you the reader feel any better, the government at the US
federal
level has all of the problems of local movement but in different forms
that
are typically less viable to the general public.
Speed of the collapse, comments:
This collapse will not happen in the immediate future of your reading
this,
that is to say a 3 year to 9 year delay of this is possible.
There may be not one master point of collapse (as implied with the Great
Depression), or more likely it will be a perfect storm of conditions that
will set up to 10 global economic conditions (or 20 but at least 4
conditions) into new states not yet seen before or anticipated.
Assumptions:
Conditions can be "TRADITIONAL HISTORICAL FOREX RELATION****PS" such as
(AUD
> NZD), or any set of stock or bond relation****ps that although
traditionally understood going thru a phase change making new
comprehension
much longer to take effect.
To be perfectly blunt I will say I have no idea here of what the trigger
conditions will be, as nature always can find new and supervising ways of
revealing itself. Assuming that 'peak oil' will play a part probably is a
marginally good idea based solely on oil's place in the US economy.
However,
I don't see 'peak oil' as being 100% of the triggering cause, it is more
like a reasonable number like 1.5%, noticeable but negligible in the
overall
scheme of things.
It is impossible to guess which kinds of derivatives or derivative trades
will trigger the collapse. It is impossible to know the unknowable.
What levels of economic damage are we looking at?
I am assuming for a government entity covering the needs of 30,000 people
a
debt level of 500,000 will be incurred due to the nature of the leveraged
derivatives.
ASSUME 2.28 people per household
ASSUME existing household debt nationwide in the US averages to $3,000;
don't add this number to any of the following numbers just note its
existence.
ASSUME that this model is a massive overly linear oversimplification, and
that the real world events this model attempts to predict will be baffle
the
mind. There is a total lack of imagination in this model, but that does
not
lessen the general overall probabilistic accuracy of the collapse it hopes
to simulate. The real world economy is always more interesting and varied
than its financial simulation.
The "Optimistic Model"
-- 123 is used here to allow for easier reading of the numbers; this
particular model may
be a realistic model for many government entities
Math:
$500,123,123 / 30123 people = $16,602 extra debt {per person} on top of
existing rates per household;
COMPUTE NEW DEBT BURDEN: 2.28 * $16,602 = $37,852 per household
The "Pessimistic Model"
-- 989 used to avoid 1.0 billion; this may be the realistic model for many
government entities that make larger leveraged investments
Math:
$989,123,123 / 30123 people = $32,836 extra debt {per person} on top of
existing rates per household;
COMPUTE NEW DEBT BURDEN: 2.28 * $32,836 = $74,866 per household
Note:
Multiple taxation districts [or taxation layers in general] exist on top
of
each other in a nearly unregulated "hodge podge" such that one should add
both the pessimistic and optimistic models per household:
Math: $74,866 + $37,852 = $112,718.
The sum is: $112,718 extra debt {per household of 2.28 people} on top of
existing rates of current and future government debt per household.
ONE MUST ASSUME THAT THERE WILL BE A 5% interest added to each household
repaying this amount, as the is the US standard interest rate with respect
to paying back government debt. One must assume that the 5% interest rate
will not last, and that the interest rate will possibly reach 15% per
annum
given worsening economic (and debt) conditions.
NOTE:
It is assumed that this will occur when "Peak Oil" has fully stopped
peaking. That is to say that global oil production will go down each year,
meaning less oil available for the US economy each year.
It is assumed that the US has only managed to achieve a 7.5% decoupling of
economic growth from energy use. This 7.5% number is an overestimate, and
realistically a 3% decoupling is probably the recommended number. NZ has
managed to average between 10% to 15% decoupling of economic growth from
energy consumption. The US is no way near NZ in terms of efficient use of
energy, in terms of decoupling its energy use from economic growth.
This model ignores the possibility of some levels of government actually
getting themselves into debt in the 2 billion to 5 billion dollar level
[per
a normalized population of 50,000 people]. This much higher debt level is
not theoretically impossible. It is possible in at least 2% of the time
when
this governmental finance implosion happens. The initial explosion of new
debt will cause future explosions of debt that is itself leveraged.
THE BAIL OUT
All of the corrupt local entities that went out of their way to make
clearly
corrupt investments will not [as a rule] be taken over by the investment
banks. That kind of investment bank takeover would mean a possible end to
the existing multi-generational corruption that is so deeply ingrained in
the American way of life and way of government. In America there must be
corruption fist before the government moves to create any goods or
services.
The Court systems in the US will try as much as possible to maintain the
sovereignty of their corrupt relatives in the other government sectors
regardless of what the law actually says.
However, there will be this pattern in the bailouts, that we know from
past
events like the Savings & Loan debacle of the late 1980s, and the Orange
County debt bubble:
-- Counties will try to bail out smaller cities, water districts, etc ...
in
most states.
-- This will leave the counties [that now are barely holding ground with
their current debt levels] beyond bankrupt. Counties will have to be
bailed
out by their respective state governments.
-- Some states will have such large sale economic black holes created by
the
multiple levels of bailouts such that the only way for the entire state
not
be be repossessed by the investment banks would be to merge with other
states. Merging states (a reasonably sensible solution to an economic
problem when there are 50 states) will not happen. The American mind has
no
such concept of states merging, and 100% of Americans would prefer to go
to
a public square and blow themselves to bits than see states or counties
merge no matter how extraordinary the cir***stances.
-- One can assume that the Federal Reserve will be involved eventually, by
the time that 20 states could be declared "non sovereign entities via debt
load issues". There will be attempts at bailouts via the Federal Reserve
of
several levels of government. However , weather the US [as a whole] will
be
able to maintain any kind of 'economic sovereignty' at the end of this
economic cataclysm is really more up to luck. This luck is totally
dependent
on the depths of corruption at the federal level, and the US government at
the federal level is substantially and substantively corrupt.
I will just assume that the US will move from being a titularly sovereign
entity to a non-sovereign ... if you think in practical geopolitical
terms.
Social and sociology notes:
There will be and must be a large scale coverup at all levels of
government.
The media cor****ations, as they depend on the Federal Government for their
broadcasting rights and maintenance of their marketing zones ... will make
the American people believe it is their own fault even when the evidence
is
out in plain sight that the exact opposite is true.
Academics will be able to fully uncover the reasons for disaster coming to
pass some 20 years after the event, but the event itself may be a mess
like
the triggers of the great depression.
It must be said that 20 years from now all the nepotism, favoritism and
kickbacks can be totally swept under the table. Modern US governmental
accounting books can be made to reflect that blameless people made the
actual decisions that led to the finance collapse.
In the long run not a single person in government [and certainly very few
in
the finance sector] will be punished. The best case is that maybe 6 CEOs
spend 6 months in prison based on a flimsy "failure to supervise" aspects
of
US finance system law. The US Supreme Court will overturn their
convictions,
with a probability of 90%.
The American people are so docile and so engrossed in the slave mentality
such that there will be no social unrest. This will baffle the rest of the
world, and not help the USD value on the world FOREX markets.
The Foreign Exchange Impact
The USD will probably drop like a rock following this parity pattern
(t=t++).
BASIC computer line numbers are used to allow for room to fill in
currencies.
10. CAD, AUD: already achieved -- only here as a marker
20. NZD, a secondary marker - assumed to happen before YY2009-DD128
???? : the exact order of parity is not known beyond this point
30. PESO (Mex)
40. YEN / Indian Rupee
50. FIJI DOLLAR or PNG KINA (made stronger by relation to AUD & NZD)
This is not a complete series of the FOREX collapse of the USD.
Traditional
FOREX relation****ps other currencies [that have been moderated by the USD]
will in many cases go thru a phase or polarity change. As the US Dollar
collapses, and the USD ceases to be a global reserve currency new currency
relation****ps will form. This has already started to happen as back as the
late 1990s, but in a weaker form.
In the end at least expect:
1.0 YEN = 1.0 USD (optimistic)
or
1.0 RUPEE = 1.0 USD (pessimistic)
NOTE:
As of March 2008 the EURO has [more or less] inherited the role of the new
"global reserve" currency. Many economists have made arguments that the
EURO
has already reached this position in relativistic terms perhaps one or two
years ago.
The only fly in the ointment is that Germany and France are in a state of
near bankruptcy in the late 2000s. I expect that this tem****ary insolvency
is merely a tem****ary phenomena and that a reasonable way can be found out
of this EURO mess, with the solution probably being a weaker EURO. It is
not
expected that the EURO will decline to the value of the USD but merely
decline to a band that hovers around the CAD and CHF.
The USD is not a global reserve currency at the time of this being
written.
This is based on the 3 to 5 common parameters used to determine if a
currency meets the conditions of being a 'reserve currency':
1. People like to own it (the AUD), as the nation is managed reasonably
properly
2. It has the strength and power to exist as a 'classical reserve
currency'
(EUR)
3. There are classical economic reasons to posses it as a reserve currency
(UK Pound)
4. It is a regional reserve currency, the YEN and Rupee being classical
examples.
The only fix that cannot and will not happen
This fix is not guaranteed to be 100% effective, at best only 10% to 20%.
I know of no other fixes, and there probably are no other fixes that can
really exist.
ALL US Governmental (Federal, State, Local, District [Water, Sewer,
Garbage,
etc...]) Bonds MUST be declared JUNK. Not just the standard junk bond
rating
but and the lowest quality of junk bond existent. Perhaps a special
category
for this kind of junk bond should be created [in the global bond rating
system]: zzz000. Some may humorously argue that I should suggest tptptp,
as
in toilet paper.
Any non-US person or non-US finance entity should get out of owning any
kind
of US bond assets or derivatives containing US bonds (from any layer of
government).
This decoupling from the USD and USD financial assets is the only way to
save yourself from owning the equivalent value in toilet paper. A 10,000
USD
bond [when this mess is over] will only be worth about 10 USD in the most
ideal outcome imaginable.
Why this fix will never ever happen:
All bond rating entities in the US plus the rating subdivisions of non-US
finance companies all possess US staff that are 100% subject to
corruption.
In the US bond rating sector nepotism, favoritism and kickbacks have been
endemic since the end of the Vietnam War as part of the way business is
done. Bond ratings staff in the US [in the modern era] are not
substantially
or substantially policed. However, like in the City of London all is kept
quietly under wraps so that the corruption can continue.
In a command monetary system, only a command can fix things:
I suspect that a US Presidential "Order in Cabinet" (but technically is
not
called a decree) could fix the problem. The US has had mostly
non-interventionist (in this part of the economy) presidents in the past
12
years so there is no possibility of this ever happening.
The Aftereffects, beyond the USD becoming totally worthless
Background (going to meetings): The smaller the government unit in the US
the more boring and less frequent its meetings. Most decisions are made
outside regular meetings, and only nepots and other political hacks show
up
at these meetings. More or less your local US sewage or water district (or
school district) is totally unsupervised.
The US governmental infrastructure will start to decay: all local
government
assets (and some state government assets) will not be maintained. Debt
maintenance will increase over time for the entities that absorb the debt
from the smallest governmental entities, namely counties and state
governments. Bizarrely, there will be no net layoffs within the bankrupt
local entities that got into this mess. For the local entities that
started
the mess it will be business as usual.
Paying back all the debt may reach a point where the US Army may need to
be
recalled from most of the countries it is now resident in so that the
basic
infrastructure can be maintained: roads, bridges, city streets, electrical
and sewer systems.
For the person that owns a theoretical $200,000 home (and with $100,000 in
bank reserves) and has a marginal income to maintain local rates (city
taxes, utilities...) so that their house is not repossessed by the city
this
is what they can expect:
150,000 of extra imposed taxes (over a 15 year time frame, but certainly
spread out over a 50 year time frame by bond manipulations)
+
Interest rates on payments of this $150,000 increasing from 5% to 15% (or
higher, possibly 25%) over a 20 year time frame.
&&&
a total decay of all government derived services to this household.
Wealthier "upmarket" households will not be as badly punished as middle
class and working class households: expect up to 50% of all homeowners to
lose their home in the USA over a 20 year window of time related to this
finance implosion.
Theoretically one could expect US home owner****p to go from whatever rate
is
is now to 20% or 30% best case. THE MORAL BEING: even those who believe
they
are well heeled [and that own their home] have a 50% chance of losing it
over taxation.
America, a nation famous for tax evasion and lower taxation rates [than
most
OECD nations] will see an astronomical increase in existing tax evasion
simultaneous to local tax rates rising nationwide to levels beyond what
Europeans are used to.
In spite of the raise in local tax rates: no new services will be provided
and the infrastructure maintained by taxation; that infrastructure will
start to fall apart because so much money is being sent off to pay for
interest and principal payments on debt. The collapse in the local
government infrastructure will have analogues to the collapses of similar
infrastructure in Africa after the colonial powers left.
A lot of local government assets may be privatized to get rid of 10% to
20%
of the debit burden in some cases. It is not likely that many state or
federal government assets will be privatized in this mess, but some
privatization may occur. The investment banking entities will inherit
government assets that have very high negative future value.
How to avoid the disaster, a non-American's thumbnail guide to surviving
this mess
What you probably should do:
1. Totally divest yourself or your company of any USD holdings or USD
assets. To maintain a US base and advantages I can foresee that a model of
90% disinvestment out of the USD and US finance system.
2. Have your money holdings spread across at least 5 different currencies
in
5 different countries and banking / finance systems. Expect your net worth
losses to be around 10% to 20% as this crisis unfolds.
3. If you are only in 3 different currency zones your net worth losses
will
be up to 66% in some cases.
4. You must be prepared to abandon every single USD asset or financial
instrument, as its value can and will drop nearly to zero.
5. Some economies are more firewalled against economic declines in the US,
but it ultimately boils down to what nations own the least US currency and
USD derivatives.
Stuff I have totally ignored, but explosively im****tant stuff
These "theoretical guesstimations" have ignored many im****tant parallel
effects in the US governmental and finance system that increase the "Net
Debt per Household (Governmental)".
In a nation like Australia or NZ, finding the "Net Debt per Household
(governmental) might take up to seven years to perfect to the level of
resolution of postcodes. However, even in the messily run Canada, this
number can be be derived at the level of resolution that is accurate to
the
postcode level of geographical ambiguity. There may always be unresolved
issues related to future costs, and the characterization of existing
government owned derivatives.
I don't know all that I have ignored, but here are a few things that have
crossed my mind:
1. Medicare's slice of the US yearly budget is predicted to increase over
time to absorb the entire US military budget in its entirety. Although the
increase in the size of the Medicare budget will [as most demographers can
plainly see] lead to the elderly population being any healthier in
retirement.
2. The US population is aging, and the retirees will likely not fully
retire
for a long time. This creates an artificial distortion of Social Security
income and future expenditures.
3. The US education system has collapsed: the best SAT scores were in the
mid-1960s and have not risen since. Although the SAT scores alone make a
bad
sample mechanism, there are many many separate bodies of evidence from
academic research to indicate that the modern American is geographically,
geopolitically, scientifically, and financially illiterate.
The US population can neither see this crisis (and other disasters
relating
to government) coming. Nor does the US populous have the intellectual
skills
to come up with a set of workable solutions to the problem. What solutions
are derived by the populous will not punish those that made the bad
decisions in the first place. This kind of disaster [as it were] will the
US
into a non-existent non-entity.
4. No American person [and most if not all American Economists] has any
idea
exactly how much governmental debt there is per postcode. Admittedly, in
Australia, NZ and Canada it might take 7 years work to find such numbers
at
the postcode level of granularity. There still is the issue of accounting
for government owned derivatives (separate from cor****ate shares and
bonds)
in the Commonwealth nations.
Still, that said it is totally unknown to me, and I assume all US
economists
the thumbnail calculation of "Net Governmental Debt per Postcode". The US
governmental debt problem may be far more sadistically perverse than my
crudest underestimations can derive.
5. The US healthcare system is run in such a way that a substantial part
of
the population working in the private sector is literally one sickness or
accident away from financial insolvency. This bizarre financial
arrangement
did not factor into my analysis as my disaster model only accounts for the
decrease on home owner****p via an explosion of public sector debt. In any
case, it may non-linearly amplify the affects of this disaster as a
decrease
in some types of public services may lead to more private sector accidents
and illnesses.
6. Political 'noise' saturating the mass media to a point that it
overpowers
large segments of the general public from being able to see what is going
on
or caring.
The US mass media is very accustomed to covering highly unim****tant
celebrity rows, as it is highly profitable. However, the way the US media
is
structured has led to this being done with the coverage of politics.
When it comes to political rows among politicians, 90% of the time the row
is not im****tant as 90% of the time it does not impact long term
government
policy ... at least that is the trend in the US. Saturating the mass media
with totally unim****tant political rows is a way to guarantee complete
public apathy over all levels of government policy and decision making.
There are myriad reasons for this: local, state and federal government
employees most of the time end up having their realities hired into the
public media as a way of guaranteeing a total lack of scrutiny. Generally
this is a favoritism hiring swap, done with mass media employees wives or
husbands.
This endemic policy of favoritism hiring swaps has evolved in spits and
spurts since the beginning of the Cold War. After the Watergate Scandal
this
trend has become part and parcel of mass media and public sector
interaction. You could argue that American newspapers and newscasts have
not
been beneficial to the general public in the USA since the 1980s.
These favoritism (public ? private sector) hiring swaps have become
unsupervised since the demise of USSR media that openly opposed the way
the
US runs itself. It may sound ridiculous that the USSR kept the US from
destroying itself politically, socially etc during the Cold War but it is
true.
Am I saying that investigative journalism of government in the US is dead?
No, it is just that is almost dead. Lower levels of government are
completely protected from public scrutiny via favoritism in hiring
compounded onto deep public apathy.
Even if there was a financial implosion in public sector debt via
investments in shoddy and misleading derivatives ... the public would not
care 'not one iota' about the the whole matter thanks to the mass media .
7, 8, 9 ...
Conclusions
Frankly, I don't give a damn if the US wants to send itself into financial
hell. I am not an American and my stay in the American society has not
been
successful one. I would leave in a heartbeat for Australasia to live
permanently except for the lack of 150,000 EUROs. The thought of even
seeing
another American again abhors me, as no possible good could ever come from
it.
It is not likely that the US will continue to have the present level of
geopolitical power that it has now for a combination of internalities and
uncontrollable externalities.
Regardless of how it happens the US will become a nation with a very low
rate of home owner****p. The US will also become a nation with a highly
displaced populous. In a way the US will become internally similar to
China
or India but without the population being able to think for or take care
of
itself.
There are already many nations that currently have parameters of home
owner****p and displacement similar to what the US will have in not too
long
a period of time.
In the end the US will be 'a has been nation' - not a so called 'world
power'.
As with bullies: the bigger they are the harder they fall.
|
