The economic impact of the current Exodus from the United States.

It wasn't that long ago that Latin American countries were in the shitter and I wouldn't be throwing rocks on their glass house 'cause it could still break!


http://money.cnn.com/magazines/fortune/fortune_archive/1989/04/24/71889/index.htm

 

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April 14, 2008

SouthAmerica: Reply to Risktaker

This is the title of the article from 1989 that you posted above:

"A LATIN DEBT PLAN THAT MIGHT WORK The Brady proposal lays out a plausible scheme for solving the monstrous problem -- but only if the debtor countries clean up their messy economies. That's a big if.
By Jeremy Main REPORTER ASSOCIATE Carol Davenport
April 24, 1989"


Now if you go back just a few more years – let’s say 1974 – Brazil did not have an ethanol industry, and that created a massive problem for Brazil during the early 1970’s oil shock.

But Brazil has learned its lessons and it has adjusted its economy accordingly.

Brazil has also adjusted its dependence on foreign debt, and today Brazil it is a creditor nation.

Please explain to me what the United States has learned since 1970’s about its dependence on foreign OIL?

Nothing!!!!!!!!!!

Today the United States is more dependent on foreign sources of oil than ever before.

Regarding the subject of borrowing money from other countries – please tell me which country is the one acting like a third world country today?

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And you call yourself an economist right?

before 1980, the Oil world trading was based on goverment to goverment deals, On those days, the US goverment was 100% dependent on foreing oil.

Today, the Oil world is based on the spot market, For that simple reason The Oil producing countries are dependent On the US economy, No the other way around, no matter what socialists burocrats like you say. That's Why the USD today is so importat to the world wide commodities prices. and let me tell you something, that won't change anytime soon because the high economic cost for those oil producing countries on that equation. So YES, the US learned big time from those days!

Dont Forget that The US is the 3 largest producer in the world, and unlike most arab's oil, The american one is the one with the highest quality (sweet crude). And The US exports are at the highest level in history.


On the Other hand, you act as the typical 3 world country wannabe, you made one thing right and suddenly you are the future, the best, the kings and bla bla bla bla... argentina acted the same way in the 90's and look what happen, Brazil acted this way on the 1970's when they where exporting like mad.. then came the end of the bull market in commodities and you guys wen back to reality..

The same thing will happen once this Bull run dry.

 

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Rubibond007: before 1980, the Oil world trading was based on goverment to goverment deals, On those days, the US goverment was 100% dependent on foreing oil.

Today, the Oil world is based on the spot market, For that simple reason The Oil producing countries are dependent On the US economy, No the other way around, no matter what socialists burocrats like you say.


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April 14, 2008

SouthAmerica: I have no idea what you are trying to say.

What the spot market has to do with the fact that Brazil was 100 percent dependent on oil in the 1970’s – but since that time the Brazilian government fixed that problem and most cars in Brazil uses ethanol today.

Only 10 years ago Brazil was importing 40 percent of its oil needs, but in 2008 Brazil is energy independent and Brazil is exporting oil for the first time on its history.

In the 1970’s the United States also was in good shape and look at what happened to the US since that time.

Former President Richard Nixon was in office when the United States reached the first trillion US dollars of cumulative debt in the early 1970's. Today the United States is approaching the $ 10 trillion dollar of cumulative outstanding debt plus another $ 70 trillion dollars in liabilities that are coming due in the near future related to the baby booooooooooooooooooom generation.

In 2008 Brazil has enough foreign exchange reserves on hand to pay all its foreign outstanding debt and part of the domestic debt in local currency. Brazil has never been in such a good financial shape as today – and in the coming decades Brazil is not going to have the massive costs related to the old folks like the United States.

In the 1970’s the US dollar still had some intrinsic value, but today the US currency is turning into confetti.

I don’t know how much longer the countries from around the world will accept confetti as a form of payment for their goods – very soon they will start demanding real money.

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April 14, 2008

SouthAmerica: By the way, the 1967 US$ 1.00 dollar it was worth only about US$ 0.15 cents as of the end of 2007.

In the near future when the inflation rate picks up steam in the United States in no time the 1967 US$ 1.00 dollar it will approach zero in value and becomes worthless for all practical purposes.

Check it out for yourself at:

http://mykindred.com/cloud/TX/Documents/dollar/index.htm


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Wow, what a thread! Nice comments. “South America”, you were good in explaining. It must be true as USA is slipping down. Dollar going down. They also respond late to crisis like that earthquake & tsunami in Asia, as they have less money. IMF biggest debtor is USA also. US has highest voting powers in IMF, so can get funds as it wish.



Also, Latin America improving see here: http://www.forbes.com/markets/feeds/afx/2008/05/07/afx4980684.html



“Latin American nations have made impressive economic progress over the last decade but the commodity price boom poses new dangers, the International Monetary Fund (IMF) chief warned today.”



Possible that US figures of debt are not correct as IMF is under its control as seen here: http://en.wikipedia.org/wiki/International_Monetary_Fund#Criticism



“The role of the Bretton Woods institutions has been controversial to some since the late Cold War period. Critics claim that IMF policy makers deliberately supported military dictatorships friendly to American and European corporations.”



Same here with World Bank, http://en.wikipedia.org/wiki/World_Bank



“Some critics of the World Bank believe that the institution was not started in order to reduce poverty but rather to support United States' business interests, and argue that the bank has actually increased poverty and been detrimental to the environment, public health, and cultural diversity.[4]”

“It has also been suggested that the World Bank is an instrument for the promotion of US and 'Western' interests in certain regions of the world. “

 

Hey dim wit, quit pretending that you have any capacity for real economic analysis or that you know anything about the future of the USA.

All of your debt talk is crap. What matters is debt to gdp ratio. Ours is not a problem.

Your cities in Brazil aren't safe. They are crime riddled. Most of your poor shanty dwellers would consider our prisons a resort.

There is a long f-ing line to get into the USA. People wait years to get here legally and many cut in line and come illegally.

When is you're country going to get a blue water navy hotshot? You know the kind that can project power across the entire planet and protect worldwide commerce from being hijacked. No other country in the world does as much to facilitate international trade. We'll be doing it tomorrow and the day after that too.

While we're talking mililtary: Learn the difference between being able to kick a country's butt and being able to build a democracy where none has been before because the governments of Iraq and Afghanistan were toppled in weeks with casualties in the hundreds (for us).

Your growth rate? Good for you. When we grow 3% it is equal to about 25% of your entire economy.

Brazil is a great, up and coming country. I've had money invested there for about five years now. It has done great. But if you think coming here daily to list everything wrong with the US and then listing everything good about Brazil is in any way an intellectually honest comparison then you really need to take a look at your own education system buddy.

And sleep tight knowing that all those commodities you are shipping to China will be able to take that Panama canal shortcut because we built it. We also toppled Noriega when he deposed an elected president in order to control it.

 

I agreed with everything you said except the debt part. We are in a major mess with the debt. To the likes noone has a clue to get out of.

The SS trust fund goes cash flow negative in about three years. This means that the treasury will have to find someone else to borrow from (and they are unlikely to find someone as stupid as the SS trust fund to loan money at the crazy near zero rates the fund did)

Then for extra fun you get to add in the 60-80 trillion in obligations of medicare and medicaid that we cant pay.

over 11% of the federal budget goes towards paying interest on what we already owe (about 10 Trillion).

If we tax 100% of earnings we still will not be able to pay it.

If we cut out everything except the debt repayments and medicare/medicaid we still can not pay it (no military, courts, congress etc....)

The biggest voting block is and will be the people that are either collecting the medicare or are about to collect it.

our freak show of candidates for president are only talking about how they are going to spend even more money and the dems are openly saying more taxes.

I am worried even if no one in DC gives a crap what they are doing to our future.

 

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H hubbins: All of your debt talk is crap. What matters is debt to gdp ratio. Ours is not a problem.


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May 9, 2008

SouthAmerica: You forgot to quote the current US government position: Debt does not matter since the US government has an infinite credit line from the rest of the world. Without US business there is no world economy, the rest of the world would stop – the US economy is the only economy relevant to world affairs, and so on….

By the way, if you had the chance to read the latest issue of Harper’s magazine – the article by Kevin Philips “Numbers Racket – Why the Economy Is Worse Than We Know.” In that article he mentioned something that I knew for a long time the official government figures for GDP is a real Fairy Tale; about 15 percent of that figure is made up of stuff like the government come up with the value of having a free checking account and that Mickey Mouse number is added to GDP.

Without the Mickey Mouse stuff the real GDP of the United States is around $ 10 trillion dollars. And when you calculate the amount of Defense spending based on the real number $ 10 trillion dollars then you get a better picture of how much money the United States is pissing away in wasteful wars including Iraq and Afghanistan.

Bu the way, a bunch of people armed with weapons vintage World War II is giving a real of a hard time to this army armed with the state of the art weaponry that cost hundreds of billions of US dollars.

Get into your thick head – the world it is too big for the United States to try to police it with its little army.

Keep in mind: the United States could not beat the North Koreans in the 1950’s – after that the US lost the Vietnam War – and in the last 5 years the United States did not look so hot fighting in 2 countries that had been completely destroyed and have a few thousand freedom fighters armed with weapons from 60 years ago and the US army look like the Soviet army in Afghanistan in the late 1980’s.

The difference is that today the entire world is watching on a daily basis on television and everybody knows how inept the US army has become in Iraq and Afghanistan.

Can you imagine if the United States had to fight tomorrow a real war with a country such as China?


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Hhubbins: There is a long f-ing line to get into the USA. People wait years to get here legally and many cut in line and come illegally.


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SouthAmerica: Thousands and thousands of illegal immigrants have been heading home since last year – and these people are the canary on the coalmine.

Everything that is good eventually it will come to an end.

Look at the British they used to rule the world and the seven seas, and many British people still delusional and think that they still a major world power – and they want to hang on to an obsolete currency instead of adopting a new currency for the 21st century.

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I keep looking at these threads b/c I want to hear some uplifting stuff about how a cool democratic country is showing some signs that is on the right track, and maybe learn something new about it. But all this trash talk about the US is annoying. Don't you realize most of us in the US would like to see Brazil prosper and earn a seat at the grownup table? Other than India, Brazil is probably the up-and-comer we are cheering for the most.

But can't you start out by comparing Brazil to Australia or Germany? I think it has to keep doing what it is doing for quite a while without backsliding to really compare it to the US with a straight face. And keep that in mind - there are countries have a promising decade or two then peak or blowup.

You are probably right that the US won't be a superpower forever but I doubt this is the year that it ends, and you probably should not hope that it is. It seems like we have been hearing we are going down the shitter for 40 years or so but we somehow hang on. Hopefully when it finally is over we will be able to look back at our turn at the front and say we did more good than bad for the world. Even if we are working for Brazillians when that day comes.

But I want to make 3 substantive replies to your points and ask you 1 question:
1) Debt capacity matters. Think in terms of interest coverage - the less volatile economy means the US can borrow more as a % of GDP "safely" than many other countries. And if our creditors didn't agree then treasury yields would be a lot higher.
2) If we are funding good investments with our debt then we are better off using our debt capacity in the long run. And maybe you can take issue with a particular investment in our portfolio or two, but the long term track record seems good.
3) I think you are confusing some nationbuilding difficulties with the ability to defeat an enemy when the gloves are off.

And my question to you is I would like to see your estimate of Brazillian unemployment adjusted for all the stuff you adjust the US number for, unless you claim the official number bakes all that in. BTW, in much of the country our low unemployment rate is real, we are now putting the marginally competent to work.

Hopefully I will never make a post this long again.