$1 USD, that's like $1 CAD?

[SandChigger]

Is BEAUTY of Capitalism, no?

[Egeides]

Is BEAUTY of Capitalism, no?

Then I'm surprised to learn that you're a Socialist ::)

Japan is said by some to be a supremely capitalist society - maybe some think capitalist = competitive + efficient = Japan. I don't know if you're into everything Japanese because you live in Japan, but any view on what made it work in Japan? (or "work better", since I know little of it)

As competitive as they might be, the Japanese I have met were not competing against each other but rather helping and supporting each other (it also seems to bring aspects some foreigners are uncomfortable with).

[Andrew]

U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit

I love how the only way to get out of this credit and debt crisis is to take on more debt.

Labour's $37B plan will cut taxes, boost spending, but Conservatives say it could double nation's debt

I saw on the news last night that Britain was planning a 6 year deficit taking on massive debt to solve the crisis.

So consumers and businesses take on massive debt, things go bad and government takes on massive debt to try and fix the problem.

Fed Commits $800 Billion More to Unfreeze Lending

[Tatar Khan]

This rests on the idea that the governments can not default on their debt (well the developed nations do not) because they always have option of taxing more to repay it back. Therefore they can go into debt, while companies and people if they can not repay will have to go default.

[Andrew]

And yet they never pay back the debt. Sounds like a get rich scheme from the banks. Lend large amounts of money (they create) to governments, and get payed interest forever.

Take my provincial debt for example. $1.5 billion. We pay >$100 million interest each year. So they get a 7% return forever, as that debt will never be payed off, and it will only get bigger (deficits).

Americans' Food Stamp Use Nears All-Time High

Fueled by rising unemployment and food prices, the number of Americans on food stamps is poised to exceed 30 million for the first time this month, surpassing the historic high set in 2005 after Hurricane Katrina.

WTF 10% of Americans are on food stamps? That's the equivalent of Canada going on food stamps. Must be exaggerating.

FDIC Adds 54 More Banks to 'Problem List'

Hmm, which banks to short. ;)

[Dante]

I was going to just postulate on the consequences of letting everything work its course, but I'll leave that for a few posts hence and open the floor a bit first. What would happen if political support of troubled institutions just... stopped? Nobody bails out the banks. Nobody saves the system. How bad would it be?

[Andrew]

We'd be back to the stone age.

In reality though, the US gov is "against" bailing out US automakers (purely to make themselves look tough). But everyone knows that they will eventually get bailed out. The gov is throwing money everywheres. Money they never had.

The gov bailed out Citigroup bank, and now talk of bailing out Bank of america. Where did the profits go over the past 2 decades? They disappear so that when a loss occurs the bank fails? What kind of business are they running?

It is good doing business with the government. You can be assured they will bail you out, or you will be able to get a lot of money from them before they realize you scammed them for money. And they won't do anything about it.

As I pointed out before (mostly in Rothbard paper), the government can not and will not banks fail. It's not a matter of whether they will should/could let them fail, it is impossible. It hasn't happened in centuries (to let the banking sector collapse).

Now you are asking what would happen if tomorrow the gov (in actuality the fed reserve is made up of a consortium of banks) let banks fail. There could be a depression, but I would think new organizations (or current ones), would actually act like banks. Receive money and lend that money out. But that hasn't happened for more than a century (since invention of reserve ratios, effectively multiplying money out of thin air).

I guess no one wants to let banks fail because they don't know what that would mean.

Western society depends upon debt in order to get anything done. Businesses need debt to start a business, but even after they have started and make money, they continue to rely on debt. This is why you hear about "credit" drying up for businesses and they can not afford to buy inventory etc. And why are businesses relying on debt even though they make profits? Most likely leverage, to take risks to maximize profits. It would be nice to see businesses rely less on debt in order to operate.

Maybe we should go back to the economics of 1700, were money multiplication did not occur as much. They had interest, and loans and stuff, but I didn't read about a bank or merchant receiving a debit, then loaning out 10x as much money.

And I've rambled enough and probably not answered your question. :P

EDIT:

I think most westerners prefer todays economy/quality of life compared to 100 years ago. So something is working.

[chatfsh]

Americans need to decide whether they are capitalist or socialist.  Having the government bail banks out and buying stock in these banks is  a means to nationalize them, same goes with the automobile industry.  Honestly, that frightens me a little.

I

[Egeides]

Gold is at 800 since quite a long while now. What makes them think that it'll be at 2000 at some specific time rather than "some day"?

[Andrew]

Some people believe that the USD will collapse.

Citigroup says gold could rise above $2,000 next year as world unravels

Citigroup is going bankrupt, so they'll say whatever is in their best interest. If the USD does collapse and you live in the USA, you will have better things to spend money on than gold. Such as food ;)

[Khan]

Sweet I might buy New York then, or maybe Boston.

[Andrew]

GM wants to fly jet below public's eye

So now they want to hide whenever they fly on their private jets. They want governemnt money, but will not cut back any money for high up executives. They have no problem firing employees who make vehicles, but as soon as you go for the private jets that really pisses them off.

[chatfsh]

Sweet I might buy New York then, or maybe Boston.

Heh, what you fail to understand is that when the U.S. goes down, we

[Khan]

Pfft we're gonna start to get pally with Europe. ;)

[chatfsh]

Oh, I

[Egeides]

Hwi:

Gold is at 800 since quite a long while now. What makes them think that it'll be at 2000 at some specific time rather than "some day"?

It often looks like some are making predictions on the economy as a whole, and it's an odd thing to do if they consider "economy" as quantification of "everything". What's your bank-person perspective on that? Wannabe oracles? Or maybe the $2000 tag is based on something specific?

Heh, what you fail to understand is that when the U.S. goes down, we

[Andrew]

USA will try to bring Canada down with them, but luckily Canada has drinking water, electricity, oil (no refineries=stupid), 15 year budget surplus and trade surplus, and banks that should not fail.

We need to convert our closed car (manufacturing) plants into public transit plants (buses), solar panel and wind turbine plants.

I watched a documentary on CBC about how Germany has gone green (big industry) and now a leader in wind turbines. Canada is mostly unpopulated land, so put up wind turbines and solar panels everywhere. Jobs will be created to build/install/maintain them. With electric cars and stuff there will always be demand for cheap electricity.

Of course utility monopolies do not want renewable energy unless they control it.

[chatfsh]

According to Jim Flaherty

[chatfsh]

Egeides listen to the following clips regarding gold going to $2000 soon.

$2000 Gold in 2009 says Peter Schiff

Great reasons to invest in gold

There are many such reports out on the internet and also about the failing economy in U.S.

I

[Dante]

So, things could still get worse. And the worst is pretty awful.

Well, I live in an area that could be self-sufficient as far as food and heating is concerned. If the entire world economy goes down the tubes, the farmers will just sell stuff to each other rather than export it. I imagine. And there's a healthy deer population not too far away that could stand to have a dent put in it. Then there's the fishing villages close by, and the oh so flammable trees... Yup, life might not be as comfortable but it would certainly be possible.

So, best case scenario: everything gets better.

Worst case scenario: I have to live on venison and rainwater in a logfire-heated house, all the while getting to watch the world burn, probably unable to get a job or any money for the forseeable future.

This is what we call a win-win situation.

[Khan]

I really want London to go crazy scavenger style, I reckon I'd be ok. Now I'm going to go off and have nightmares, thanks for the reassurance Hwi :P

[Andrew]

@ Hwi

Yes I know we are going to have deficits (damn conservatives, cutting taxes and increasing spending).

My point is that Canada has had surpluses for 15 years, while USA and other countries have had deficits for 15 years. Canada will be better able to handle the recession than other countries. If other countries have had deficits forever, that means now that there is a recession their deficits will be even larger. The USA is already having larger deficits now that the recession has started, and it will only get worse. How will USA finance their deficits? They havn't had money for decades, I guess they will simply increase money supply again. Borrow another 10 trillion...

[chatfsh]

Andrew

[Andrew]

Every month the USA alerts its citizens about terrorists, simply to make them afraid and willing to let government do whatever they want.

This economic crisis will allow the same shit to happen as 9/11 did. The government will do whatever it wants. It is a good smokescreen to allow bills to pass because the media is all focused on *zomg terrorists in your closet*.

You know how in Iraq lots of money has gone missing, and billions spent on crap that doesn't work and corporations are profiting a lot? Expect the same thing to happen in America with this financial crisis. The government will hand out money to anyone who asks, and it will all be wasted with no paper trail, and no one to be accountable for it (other than a couple corporate execs who are puppets).

[Dante]

Food producing areas will have a better time of it than areas that must import. Of course America has farms, one of your biggest exports is grain. But that sort of life will be much easier for those who have some background in farming, hunting, fishing and/or how to gut something without getting entrail contents all over the place. The kind of social meltdown described is much easier when the populance is starving. Greater London has a higher population than the whole of Scotland, somehow I think the inner city might struggle a bit if there was a food shortage. Or a petrol shortage. Or indeed a shortage of anything that it requires in order to import supplies.

On the subject of internment camps, those already exist in a form. They're used to hold illegal immigrants. Personally I don't like the idea much, but it's bearable. If the net were widened to encompass other social groups? It would take very little to encourage rebellion. The public is a smidge more educated than sixty years ago, V for Vendetta and its ilk have reminded us of some important facets of democracy.