emerald33 Wrote: ------------------------------------------------------- > (to Joey D) I am glad my immediate family members > are serving in a “stupid” war. I am also glad to > hear that you wouldn’t mind if their future > commander in chief is “a philandering, alcoholic, > drug-abusing, Voodoo-practicing transvestite.” > Most of all, I am glad you shared your political > views with all of us. Thanks. I have nothing but respect for people who serve in the armed forces. I think you should read my post more closely - obviously, I don’t want the commander in chief of our armed forces to have any of those qualities (transvestism wouldn’t bother me much if s/he kept it mostly private). But I don’t want your immediate family members to die for nothing or even for something if I think it’s not very important. The only thing that we are hearing is “very important” to keeping your family members in harm’s way is that we created such a mess that the place will dissolve into anarchy if we leave. It’s approximately the same thing we heard with a modern twist in 1970 or so. This war is looking more and more like the morass of Vietnam every day. Our commander in chief doesn’t (or at least didn’t) have a clue about why and how you fight wars. There was never a decent justification for this war and we definitely made a mess of the place. Wars are meant to make a mess of places. That’s how you win wars. Now they have to recover and it will take them years and years and it is not clear that our presence will help them do it. There is still no decent exit plan (an exit plan is a set of objectives that need to be obtained so we can leave not a timetable). My point in bringing up this war is that wars have economic consequences and it’s certainly worth considering the economic consequences of this war. Vietnam led directly to the collapse of Bretton Woods, the collapse of the dollar, a terrible period in the stock market (down almost 50% peak to trough), ruinous inflation, the “Misery Index”, high unemployment - a terrible economic period. Iraq is not as big a mess as Vietnam (thankfully) but there are still consequences to directing huge amounts of capital to a worthless project. Most Americans think that leaving Vietnam was a good choice. However, our destruction of most of S.E. Asia led to replacing Sihanouk in Cambodia - a rather silly but harmless leader - with Pol Pot who killed 1.5 million people until the Vietnamese finally got offended by the slaughter and stopped it. We could have stopped that but chose not to. There is no chance that if we just pack up and leave Iraq tomorrow that the consequences will be nearly that bad (it will be more like 1980’s Lebanon, which sucked big, but it probably doesn’t bother anyone on AF now). What I most want is for you to be sitting around the Thanksgiving Dinner table with your immediate family members who are currently in Iraq. They have all their body parts intact and are completely healthy. Then I want your whole family to be able to hold hands and thank God that you aren’t missing anybody in that circle. Then I want your returning soldier family member to ask you, “So tell me about this CFA thing…Think I should study for it too?”
I thought it was our astronomical amount of debt and our continuous printing of fiat currency. They say it’s bound to collapse someday…
phBOOM Wrote: ------------------------------------------------------- > I remember in my college Econ class, we ran > through the math on how persistent gov’t deficit > will eventually lead to run-away inflation. > Thought it was pretty cool. > Hate them Keynesians. > > Just heard today that the congressional budget > estimated that a it would cost the US another 2 > trillion dollars to station 55,000 troops in Iraq > for the next 4 decades. > And that’s if nothing goes wrong. What the heck would they be doing there for 40 years? A 40-year peace-keeping mission? Then what? I guess the model is Britain’s involvement in Northern Ireland which lasted about 40 years and at its peak had about 25,000 soldiers. Was it worth it? > Now if one would entertain what would happen to > our current healthcare, social security system, I > think the best investment for the next decades > would be in anti-inflationary commodities, or bet > against US currency I don’t like either of those investments - hoarding commodities that cost money to store just can’t be a productive economic activity. If our current govt has gotten us into a situation in which holding physical items that produce no value from holding them is a good plan, we have very serious trouble. If you live in the US you are sometime going to retire in the US and thus need US $. Holding your assets in another currency because we can’t handle our own economic grwoth is similarly bad.
TPain88 Wrote: ------------------------------------------------------- > I thought it was our astronomical amount of debt > and our continuous printing of fiat currency. They > say it’s bound to collapse someday… We don’t really have an astronomical amount of debt relative to GDP and our monetary policies, I believe, are relatively responsible.
Oh and btw I think the Afghanistan thing is pretty stupid too but it’s not of the same scale as Iraq. The thing with Afghanistan is that it’s almost part of a progression that’s one of the remaining remnants of the Cold War. Afghanistan was doing fine until the Soviets invaded them in 1975 for some stupid reason like they had lots of weapons and soldiers and they might as well use them for something and we were in no shape to do anything about it (and the Chinese didn’t care much either). Except we did do something about it which was run tons of arms through the Khyber pass creating all kinds of well-armed people in Northern Pakistan (hmmm…) and causing the Soviets to leave the country in a mess. The mess led to the Taliban who offended nearly everyone, including me. We certainly haven’t made life safer for anyone in Afghanistan, but our invasion has sure brought down the price of heroin or at least made it more available. Prior to our invasion British/Taliban eradication efforts had Afghani exports of opium to around 100 tons. Now we are at 4000 tons and rising. Afghanistan currently provides about 80% of the world’s opium for heroin. So what the heck, our economy will be in tatters, but it’s really easy to get that spreading warm feeling when you just won’t care.
JoeyDVivre Wrote: -------------------------- >And that’s if nothing goes wrong. What the heck would they be doing there for 40 >years? A 40-year peace-keeping mission? Then what? I guess the model is Britain’s >involvement in Northern Ireland which lasted about 40 years and at its peak had >about 25,000 soldiers. Was it worth it? The South Korea Model. JoeyDVivre Wrote: -------------------------- >I don’t like either of those investments - hoarding commodities that cost money to >store just can’t be a productive economic activity. If our current govt has gotten us into >a situation in which holding physical items that produce no value from holding them is >a good plan, we have very serious trouble. If you live in the US you are sometime >going to retire in the US and thus need US $. Holding your assets in another currency >because we can’t handle our own economic grwoth is similarly bad. Self interest prevails. Not that the government should direct investment that way, but that individual investors could benefit in the long run. In addition, hedging against falling US currency helps to perserve total wealth and maintain our economies’ purchasing power. I wouldn’t just disregard it as a unproductive economic activity.
phBOOM Wrote: ------------------------------------------------------- > JoeyDVivre Wrote: > -------------------------- > > >And that’s if nothing goes wrong. What the heck > would they be doing there for 40 >years? A > 40-year peace-keeping mission? Then what? I guess > the model is Britain’s >involvement in Northern > Ireland which lasted about 40 years and at its > peak had >about 25,000 soldiers. Was it worth it? > > > The South Korea Model. Except the South Korea model is different because: a) They want us to be there (kinda) b) We aren’t doing anything in S. Korea except sitting there to ward off an attack c) No American that I know of has been killed by a North Korean since the war except one guy on the Pueblo (who was really killed by an American, IMHO). In any event, I would like an exit plan from S. Korea, too. Surely the S. Koreans with an economy vastly bigger than the N. Koreans can protect themselves? > > JoeyDVivre Wrote: > -------------------------- > >I don’t like either of those investments - > hoarding commodities that cost money to >store > just can’t be a productive economic activity. If > our current govt has gotten us into >a situation > in which holding physical items that produce no > value from holding them is >a good plan, we have > very serious trouble. If you live in the US you > are sometime >going to retire in the US and thus > need US $. Holding your assets in another currency > >because we can’t handle our own economic grwoth > is similarly bad. > > Self interest prevails. Not that the government > should direct investment that way, but that > individual investors could benefit in the long > run. In addition, hedging against falling US > currency helps to perserve total wealth and > maintain our economies’ purchasing power. I > wouldn’t just disregard it as a unproductive > economic activity. By all means keep some of your money in foreign investment - it’s a good idea anyway. Hoarding commodities over the long run never makes money.
phBOOM Wrote: ------------------------------------------------------- > Anyone thought Blackstone was a bad investment? probably not in the long term, and blackstone ins’t restricted to buying only US assets. Also we need to consider the fact that they have so much money they need to put it somewhere to reduce the risk of holding so much USD.
seanc - i assume phboom was talking about when china threw some $$ into blackstone?
nolabird032 Wrote: ------------------------------------------------------- > seanc - i assume phboom was talking about when > china threw some $$ into blackstone? thats the assumption i was operating under
Joey, I am not old enough to know exactly what happened in 1970’s, but I sure can see the parallels. The war, the weakening dollar (canadian dollar reached parity last time in 1976), high energy prices etc. I was just wondering if fundamentally today the reasons are the same as they were back then. What do you recall from the 1970’s and what is different now? Can we map the coming years now to to what happened next in the 1970’s , are we going to have high inflation leading to high double digit interest rates like we had back then under Paul; Or is it different now with globalization etc. The petro dollars back in the day were spent very horridly, while today they are being spent productively? Its debatable if Ben will follow Paul into raising IR’s, but he might be forced to! Or are we headed for a more Japanese style deflation and a long long bear market. Early 1970’s in the US was one of the big bear markets, but we recovered. I am not looking for predictions, but probabilities. Also, the OP mentioned that according to the Chicago Fed, if the country has consistent government surpluses than it leads to weakening currency, and if they have continuous government deficits, it leads to a strong currency. I am assuming its because surpluses cause spending and that causes inflation and that causes weakening currency?
Well, I can tell you that we’ll find out tomorrow if there is an important parallel because in 1973 on Yom Kippur all the Arab states jointly attacked Israel. The Arab states don’t get along especially well these days, but you never know. Anyway, that war led to all kinds of problems because the Arabs got their butts kicked (Egypt was saved from annihilation by the UN and a plea from the US to not destroy the Egyptian army which was cut-off and surrounded and at the mercy of Israeli air power - if we hadn’t intervened Israeli tanks could have taken Cairo in a matter of days). That led to the oil embargo which was devastating to our economy. I don’t think that can happen now and wouldn’t be as severe as it was then. Other differences I think are: a) We understand monetary policy better now b) The Cold War is over so we no longer have to care that much what the Russians think c) Vietnam was much worse than Iraq in both dollars and people lost d) Watergate But there are some things that could make it worse too: a) Terrorists groups are more organized now b) Nukes may be more freely available c) Pakistan is becoming increasingly unstable d) Financial markets are much more complicated than they were then (i.e., there are several hundred trillion dollars notional in derivatives out there) Things that aren’t different: a) Bush/Nixon
thanks for the history lesson…but thats from a political standpoint, what about from a economic standpoint? and the 1970’s in general.
bsivia, there was runaway inflation in the 1970s (and as Joey pointed out, we understand monetary policy far better today than we did 30 years ago), which of course contributed to the decline of the dollar and the weakening of the economy. Plus, adjusted for inflation, oil prices in the 1970s were far far higher than they are today, and Jimmy Carter may have been the single most incompetent president in American history (honestly, price caps? Could there be a more fundamentally moronic policy?).