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Economist declares economic 'train wreck' in America's future
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by CynicalPatriot | July 10, 2009 at 02:31 am
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If you thought last week’s job numbers were bad, take a look at the latest from Morgan Stanley’s chief economist, Richard Berner.
In a research note that’s been making the rounds of economics blogs this week, Berner declares that “America’s long-awaited fiscal train wreck is now under way.”
By “train wreck,” he means out-of-control federal budget deficits that he’s sure will finally drag the economy under — as if we weren’t already feeling badly enough about its shaky state.
“Depending on policy actions taken now and over the next few years, federal deficits will likely average as much as 6 percent of [the gross domestic product] through 2019, contributing to a jump in debt
held by the public to as high as 82 percent of GDP by then — a doubling over the next decade,” Berner writes on Morgan Stanley’s online Global Economic Forum.
First the Oracle of Omaha, Warren Buffet predicts "Worst is Yet to come" and now Morgan Stanley predicts a train wreck...
Democrats - Forget what the Republicans say, forget what the TEA Partiers say....
HOW BAD MUST IT BE THAT WARREN BUFFET AND MORGAN STANLEY WILL GO PUBLIC INFORMATION KNOWING OBAMA AND THE DEMOCRATS ARE IN A POSITION TO RUTHLESSLY RETALIATE!
What voice of reason will you listen to before our country is driven over the cliff?
For love of Country, if you are paranoid of Republicans, Conservatives and TEA Partiers, please just assess the information yourself, and reach your own conclusions!
Do you love Obama more than Liberty, Country and Reality?
Respectfully,
Don Mashak
The Cynical Patriot
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Most RecentMost Recommended Comments (16)
at 03:18 on July 10th, 2009
I think these guys know that share prices will go down after such remarks, they buy and make a profit when they quickly rise within a week or so.
at 03:31 on July 10th, 2009
Sorry Babel with great respect for you, but you are wrong on this subject. There is a train wreck on its way. I'm just writing an article about, there is no economic recovery, whatsoever. The facts are: still far too much debt everywhere in the global economy. As before explained in various articles: This financial crisis is not a recession but a depression.
at 05:24 on July 10th, 2009
I think both of you have a valid point. Present-day capitalism is going down.... Just as surely as communism has been.
If all the countries have a huge debt, then who is the debt owed to? Oh yeah... the richest people in the world. So I guess they run the world.... what happened to democracy?
at 11:23 on July 13th, 2009
Sara Star :
Capitalism may be "going down" but not in the manner you think.
We do not have capitalism in America.
Capitalism is the Free Market. Free Market means the freddom to experience risk and reward.
Capitalism is the freedom to succeed or fail.
Bill Clinton and others wanted everyone to have a home so they mandated that the banks loosen up credit for the uncreditworthy. That is not free market.
Freedom to Fail does not mean Bank Bailouts.
For 70+ years the pain and suffering of the depression prevent another widespread bank failure. The Leaders of Banks that crashed were largely not allowed to run another financial institution. The stockholders lost all their money so they could not start another bank.
New Bankers and Bank Leaders stepped in and they were very cautious because they saw the ways that other bankers had lost all their holdings through mismanagement. They were leary of having the same thing happen to them.
The people became more frugal. Go talk to someone who lived through the depression and ask them their perspectives on saving and borrowing money and the reward of hard work.
No such "Life Lessons" will be learned through this latest bank failure because we bailed the banks out. The leaders were not replaced and so they are free to make the same mistakes. And why not, the taxpayer can bail them out again.
So Sarah you are right to say the capitalism is dying, but the economic crash is a symptom of Government tampering, not a result of the intrinsic failings of the system of Capitalism and free markets themselves.
Respectfully,
Don Mashak
The Cynical Patriot.
at 05:26 on July 10th, 2009
When you wipe out the middle class, then only the rich are left and they will only have themselves to devour.
at 07:13 on July 10th, 2009
Theoretically a probability but practically not valid Sara.
By the way, Capitalism is an economic and social system in which trade and industry are privately controlled for profit rather than by the government. The only way to come out this train wreck, read economic depression, is through entrepreneurship from small and medium size businesses. That also happened after WWII in Germany under Chancellor Adenauer with Ludwig Ehrhard minister of Economic affairs at the time. It was the 'Mittelstand' medium sized and small businesses called 'das Wirtshaftswunder' translated: 'Economic miracle' that lifted Germany and the rest of Europe out of the depression and made Germany then the second largest economy in GDP terms after the US (now third after Japan 2nd).
In other words the middle class never will be wiped out, it will become the life craft for the future new economy.
http://my.nowpublic.com/world/financial-system-led-market-or-economy
at 08:12 on July 10th, 2009
I cannot believe these people are blaming President Obama alone for this economy and he's been in office all of 5 months and days. Some of those who are making dire predictions probably still have their bail-out checks in their wallets. The entire Congress, save maybe one or two people, voted for an expensive war. And I can remember reports of the economy taking a nose dive BEFORE the Iraq invasion. Check the news from the summer before 9/11 and get a little instant recall.
at 01:07 on July 11th, 2009
Hello Duo:
1st, I am on the record many times over saying it is not republican v democrat, nor conservative v liberal nor rich v poor, the real battle is WE THE PEOPLE v corrupt politicians.
That out the way, let me explain it to you like this,
Our example is an extended family of 7, 2 grandparents, 2 parents, 3 children.
The grandparents were originally made the financial decisions. while they were in charge of the household finances the family ate out at restaurants too much, bought a new television and refrigerator with all the bells and whistles and got into a lawsuit with the neighbors. As a result they spent more money than the family made and ran up a debt.
The family became unhappy and through debate, the parents said that if they were in charge they would drop the lawsuit with the neighbors, increase the children's allowance and make everything better. During the debate, the grand parents said they realized that they had allowed too much spending, the lawsuit with the neighbors must not be dropped, and the expenses must be reduced.The family did not like the idea of austerity and grew tired of the lawsuit with the neighbors.
So the family decided to let the parents start making the financial decision instead of the grand parents.
However, the parents did not drop the lawsuit with the neighbors and the legal bills continued to mount. To make the children happier, they raised their allowances even though they could not afford to. Then the parents decided to buy 2 cars and build and a build an addition on the house. To raise more household revenue though, they started charging everyone to use the bathroom...(Cap and trade) Soon they were behind on many bills and started getting calls from more bill collectors than before
The question to you is, "Who is more responsible for the present situation of the household, the parents or the grandparents?" Since they are no longer in charge, What good does it do to blame the grandparents for the direction the household is heading? (other than giving you a sense of self validation)
Please go to youtube and search "Argentina Collapse 2001 full"
I don't want to tell you what happens when a government spends more money than it hasa and prints worthless fiat money to make up the difference, let history be your teacher.
I and others for a long time have been saying the republicans have not been acting very republican for the last couple of elections. I am not saying that the republicans do not bear some responsibility for the situation the country is in. I am saying they are no longer in power so there is no point in beating the dead horse.
More importantly the 10 trillion that Obama is spending is dwarfing any thing the republicans did. Our total deficit, debt and debt payments are exceeding by large multiples anything that the USA has subjected itself to before in its history (especially as compared to percentage of GDP)
I do not tell you things to show you Obama is wrong or to excuse the bush man and the republicans for their role in the mess we are in. I tell you these things so you and I, and the rest of WE THE PEOPLE can correct the course the country is on before she is driven to economic collapse.
Nobody wins the game of poltical gamesmanship if the USA collapses and loses its status as being the first among economic and military powers in the world. Nothing matters if we all must give up our liberties to have security.
I have reached out to you in a logical and nonpartisan way.
The train wreck they refer to is not the present economy, it is the impact that all the debt that obama is racking and printing worthless fiat money for, is going to cause as its repayment and hyperinflation eventually ravage our economy. We need to stop deficit spending now.
Are you going to continue to be blindly loyal to Obama or are you going to reach your own logical conclusions based on history and undeniable economic reality.
Please take the time to go to the next TEA Party and have a rational, reasoned conversation with some of the people there and determine for yourself if we are more alike than different in our dreams and desires.
Respectfully,
Don Mashak
The Cynical Patriot
at 11:38 on July 15th, 2009
No one blames just Obama for this mess, they blame the whole political mess which has been orchestrated for god knows how many years by who know how many political figures. Really what is the difference between the Dem. and the Rep. These People are robbing all of us!! They all have their own political agenda to make as much money as they can while they can at our expense.
If the people don't do something soon, our children will not live the lives that you and I have been bless to have lived! They will live a slaves to the rich. I am sick of people who don't try to find out what's going on, just forming an opinion without searching out any information. This is what is wrong with the people of America, they all believe what they've been taught in school and don't try to find the truth them selves! They all believe what they watch on the box!!!
Please, people get informed our future is at the peoples hands that don't give a crap about any of us!
at 09:19 on July 10th, 2009
No one blames Obama for CAUSING the depression, but, he is Economic Doctor-in-Chief, and, if he doesn't have cures for the disease, then the "Doctor-in-Chief" will have to be replaced.
His stimulus package was an Rx from insanity. Congress made it up behind closed doors with way too much in terms of pet projects of the pork barrel kind for constituents. He broke his campaign promises, two of them, in the process by failing to publish the bill on-line for a week and allowing us to know what was in it and by failing to veto earmarks.
Remember Robert Reich who didnt' want all the jobs to go to "white construction workers"? Well, we should have been building bridges, nuclear reactors, repairing highways. Instead Peolosi wrote a bill that Obama never read to give out money too slowly over several years.
If we drilled for our own oil, we could save almost a trillion dollars from the trade deficit.
Obama's real problem is that he has never really been in charge of anything other than taking care of his image and touting politically correct nostrum for consumption by the media. The economy will be the undoing of Obama and the Baby Boomer left which got radicalized in the late sixties.
at 01:54 on July 11th, 2009
Hello Roy:
For some reason, supporters of Obama seem to be more loyal to them than to our country, our founding fathers principals and/or reality.
May I suggest you refer them to Youtube.com and have the search "Argentina Collapse 2001 full" and what the 59 minute video of what happened to Argentina when it spent more money than it had and printed worthless fiat money to fill the shortfall.
I do not think we can win their minds and hearts telling them that Obama is wrong.
I think our best hope is to show them real history and point out the parallels to what happened to Argentina and what is happening in the USA.
Argentina failed to balance its budget as it was warned to do, ironically, by the USA.
Its economy collapsed. The International Money Fund (part of the World Bank) said they would do a "Bail out" but with certain terms and conditions.
Argentina had was told it had to sell its nationalized businesses. No one in Argentina had money so the business like telcom were sold to foreigners for 25 cents on the dollar of real value..
Argentina was told it had to sell its natural resources. No one in Argentina had money so they were sold to foreigners for 10 cents on the dollar of real value.
Argentina was told it had to have a balanced budget. And so the social programs it had used to pay the people calm rebellion could no longer be paid. 70% of Argentina came to live at or below the poverty line. The middle class all but disappeared.
The USA does not have balanced budgets. We are offering stimulus checks to quell dissent. We are trying to offer single payer health care to further qualm dissent in the masses. We are printing worthless fiat money and/or selling worthless paper bonds to Red China to fill the deficit. Does any of this sound similar to Argentina 2001?
If the dollar collapses, the IMF will be able to dictate the same Bailout terms to the USA. GM's Hummer has been sold to Red China, Chrysler has been sold to Fiat. both foreign companies. Does any of this sound like what happened to Argentina?
It is not that I am against OBama, rather I believe in making rational decisions and learning from history... Argentina 2001, Argentina 2001, Argentina 2001....
Hello, is there anybody in there?
Those were my thoughts.
Respectfully,
Don Mashak
The Cynical Patriot
at 09:16 on July 10th, 2009
Its not Obama on his own to be blamed, he promised change that he didn't make on essential economic affairs. A close expert to Obama on this subject tells:
"The Obama team doesn't seem to know what it is doing on economic matters, does it? They had a good man on the team – Paul Volker. He was the only one who really knew what he was doing. And they seem to have edged him out.
"This is a very bad sign. It was Volker who saved the day the last time the US dollar seemed to be headed for the scrap heap. This time, it looks as though they have no intention of saving it."
For starters: Paul Volker was the Chairman of the Federal Reserve under United States Presidents Jimmy Carter and Ronald Reagan (from August 1979 to August 1987). He is currently chairman of the newly formed Economic Recovery Advisory Board under President Barack Obama.
Have a read at: http://my.nowpublic.com/world/no-economic-recovery-sight
at 18:22 on July 10th, 2009
PIM: "Secrets Of The Temple" . . . .
at 02:18 on July 11th, 2009
I followed a lot of what happened in Argentina because, as it was happening, I was teaching ESL to businessmen and women and the topic would come up.
I will check out that video, though, and refresh the details in the context of our present dangers.
at 07:44 on July 11th, 2009
A good mark Roy, the USA easily could follow the Argentine road to disaster, maybe Zimbabwe will be next? Printing money like hell is not the solution, paying down the huge pile of debt in the whole of the financial system is the only solution to recovery of the economy.
And making war is an alternative to divert public attention, what Bush II did with Iraq, creating business and jobs for the weapon industry. Awful---!
at 07:30 on July 15th, 2009
In recession's fatal error, I described the circumstances that will lead to the economic train-wreck. The future is very bleak indeed, because the problem is as with much of the rest of this world, politicians have promised too much, without being willing to raise the money to pay for all that was promised. The solution: Spend less. Or tax more. Or do both.
However in a democracy is no accountability, in order to get elected politicians has to promise more and more 'benefits.'