Global Debt Time Bomb explodes soon

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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Tue Jun 16, 2020 4:39 am

An opinion-forecast from Bloomberg: How the Coming Crash in the Dollar Will Unfold

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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Tue Jun 16, 2020 10:24 am

MPMalloy wrote:
Tue Jun 16, 2020 4:39 am
An opinion-forecast from Bloomberg: How the Coming Crash in the Dollar Will Unfold
That is an excellent article I was going to post it from another source but the gist of his opinions are IMO valid. I am not saying he is right or correct ...(this is his opinion!)...only that his positions have a logical basis. YMMV.

If this happens as described you would see a very 1970's type stagflation economy with 10%+/- annual inflation and high structural unemployment also ~10%+/-.

Bear in mind what he is describing is not a currency collapse but rather a devaluation of the USD in terms of of the currencies. This has happened before (actually in 1973) when the value of the USD was reduced by 10%.
https://www.nytimes.com/1973/02/18/arch ... ation.html


A link to a different article on an interview with the author.
https://www.cnbc.com/2020/06/15/dollar- ... r%20fellow.

The big question: Will it happen quickly or gradually?

His timeline is rough — over the next year or two, maybe more. However, Roach suggests a crash virtually inevitable, and it’s a risk investors shouldn’t ignore.

“Generally, it’s a negative implication for U.S. financial assets,” he added. “It points to the probability of higher inflation as we import more higher cost foreign goods from overseas, and that’s a negative for interest rates.”

He’s concerned a crash could spark a late 1970s-type stagflation crisis, when prices rose sharply while economic growth was muted.

According to Roach, not even a leadership change in Washington in November would be able to move the needle much — especially as lawmakers try to battle the economic impact from the coronavirus crisis with unprecedented stimulus measures.

“Policymakers to their credit have never had to deal with anything close to this disruption,” Roach said.
Duco Ergo Sum


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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Tue Jun 16, 2020 10:47 am

raptor2 wrote:
Tue Jun 16, 2020 10:24 am
MPMalloy wrote:
Tue Jun 16, 2020 4:39 am
An opinion-forecast from Bloomberg: How the Coming Crash in the Dollar Will Unfold
That is an excellent article I was going to post it from another source but the gist of his opinions are IMO valid. I am not saying he is right or correct only that his opinions have a logical basis. YMMV.

If this happens as described you would see a very 1970's type stagflation economy with 10%+/- annual inflation and high structural unemployment also ~10%+/-.

A link to a different article on an interview with the author.
https://www.cnbc.com/2020/06/15/dollar- ... [quote]The big question: Will it happen quickly or gradually?

His timeline is rough — over the next year or two, maybe more. However, Roach suggests a crash virtually inevitable, and it’s a risk investors shouldn’t ignore.

“Generally, it’s a negative implication for U.S. financial assets,” he added. “It points to the probability of higher inflation as we import more higher cost foreign goods from overseas, and that’s a negative for interest rates.”

He’s concerned a crash could spark a late 1970s-type stagflation crisis, when prices rose sharply while economic growth was muted.

According to Roach, not even a leadership change in Washington in November would be able to move the needle much — especially as lawmakers try to battle the economic impact from the coronavirus crisis with unprecedented stimulus measures.

“Policymakers to their credit have never had to deal with anything close to this disruption,” Roach said.
Recommendations?

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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Tue Jun 16, 2020 10:50 am

MPMalloy wrote:
Tue Jun 16, 2020 10:47 am
Recommendations?
Everyone has different issues and concerns and if things do not unfold as Mr. Roach anticipates any strategy implemented my be counter productive.

That said in general if we are talking about a 1970's stagflation economy with high inflation and unemployment the following did work out during that time frame (note this is opinion and not advice):

Acquisition of tangible assets with cash flow:
In other words holding little cash and converting it to liquid but real assets. For instance a business may buy more saleable inventory than usual since the inventory should benefit from rising prices.

Acquisition of real property with FIXED rate loans:
This is one is counter intuitive but if you buy real property which "appreciates" due to inflation with fixed interest rate loans the loan amount depreciates at the inflation rate so you get in effect a double benefit. Obviously this assumes you can service the debt and the costs of holding the real property are not excessive. The real risk here is that costs of maintaining the property (R&M, insurance & property taxes) will also increase with the rate of inflation which may seriously impact the ability to pay them. The way to address that with real estate is a triple net lease if you can find a tenant who will agree to that. Triple net leases in the 1970's were not the norm as they are today.

Fix your living costs today to greatest extent possible:
If you lock in your living costs (for instance buy a home/condo/whatever instead of rent) in today's dollars you should weather inflation a lot better.

Learn new marketable skills:
Learn and develop new skills that may be useful in the coming years. Intellectual capital is the best investment you can make. No one can take it away and it is inflation proof. The key risk here is that these skills may become obsolete.
Remember all of the TV & VCR repair shops?
Duco Ergo Sum


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Re: Global Debt Time Bomb explodes soon

Post by absinthe beginner » Tue Jun 16, 2020 1:59 pm

U.S. national debt hits $26 trillion.

https://www.foxnews.com/politics/nation ... t-trillion

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Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Wed Jun 17, 2020 1:29 pm

Fix your living costs today to greatest extent possible:
If you lock in your living costs (for instance buy a home/condo/whatever instead of rent) in today's dollars you should weather inflation a lot better.
Many Lessors are going month to month now to get around illegal evictions due to COVID.
You go 'round and around it
You go over and under
I go through

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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Wed Jun 17, 2020 1:37 pm

Stercutus wrote:
Wed Jun 17, 2020 1:29 pm
Fix your living costs today to greatest extent possible:
If you lock in your living costs (for instance buy a home/condo/whatever instead of rent) in today's dollars you should weather inflation a lot better.
Many Lessors are going month to month now to get around illegal evictions due to COVID.
In the 1970s leases were frequently short term (less than a year) or more commonly had a provision to bump the rent based upon a CPI adjustment at set intervals.

From a landlord's perspective the debt service may (or may not) be fixed but other costs like R&M labor, energy, insurance and taxes all rise with inflation.
Duco Ergo Sum


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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Wed Jul 01, 2020 4:29 pm

An interesting article about life in Lebanon post currency collapse.

https://www.aljazeera.com/ajimpact/esca ... 23974.html

It is interesting but IMO it not what the US would look like under a similar scenario...mainly because most Americans would not be welcome in other countries at that point. I have spent a lot of time in the 2nd & 3rd world; Americans are only welcome in most places because they are perceived to have money.

Still it is worth a read.
Duco Ergo Sum


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Re: Global Debt Time Bomb explodes soon

Post by Stercutus » Thu Jul 02, 2020 1:25 pm

Americans are only welcome in most places because they are perceived to have money.
That bears repeating. JIC anyone has ideas of leaving a sinking ship. Although I guess the US is perched on the upper deck.
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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Mon Jul 13, 2020 11:09 pm

From NPR: Red Ink Overflowing: In June, U.S. Borrowed A Typical Year's Worth

and

From Bloomberg: Singapore Slumps Into Recession With Record 41.2% GDP Plunge

Obviously not a good quarter. Dunno what else to say.

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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Thu Jul 23, 2020 11:44 am

The closure of businesses on the state and local level coupled with the current fears of the virus have greatly damaged the US economy. The question is how much of that damage is long term/"permanent" and how much is intermediate term.

Latest figures show unemployment is rising and the temporary Fed $600 per week benefit will expire 7/31 for the ~31 million people
https://www.wsj.com/articles/unemployme ... 1595444039

An article with a bit more analysis as well as opinion. YMMV
https://seekingalpha.com/article/436021 ... -7-23-2020

Some states are showing improvements (relatively speaking) but overall claims have increased.
https://www.sltrib.com/news/2020/07/23/ ... mployment/
https://www.thegazette.com/subject/news ... s-20200723

Industries have seen a lot of variance.

Sit down Restaurants and bars have seen their business evaporate.
Although Yelp is not in my opinion a truly precise analytical tool It does give some insight into the issue of restaurant closures and job losses.
https://www.forbes.com/sites/alexandras ... 5e561feb3c
Local business search giant Yelp said Wednesday that 55% of U.S. businesses on the platform marked “temporary closed” are now “permanently closed,” a shocking statistic as local establishments likely struggle to stay afloat with social distance restrictions, mandatory closures and fearful consumers.
Fast Food Restaurants on the other hand have seen a recovery. Any restaurant geared toward take out seems to have weathered the initial storm.
https://www.restaurantbusinessonline.co ... urn-normal
Restaurant sales appear to have rebounded some last week and quick-service restaurant sales have all but normalized, according to firms tracking the industry in the aftermath of the coronavirus shutdown.

Yet there remains vast differences between different sectors and the overall industry is still down considerably from where it was before the pandemic. What’s more, different challenges for the business lie ahead as states take steps to limit the virus and consumers face an income cliff without additional federal assistance.
Health Clubs and Gyms are likely to see a tremendous downturn.
https://www.cnbc.com/2020/07/23/many-do ... urvey.html
I have always found my exercise outside of a gym and I guess so have a lot of other people.

Inflation is also up due to food prices and fuel cost increases but has not yet taken off.

So you may ask what is the next show to drop? My guess is the looming homelessness for all of the people about to evicted. Many states have eviction bans in place and in many cases they expire July 31 or in August. The ban expired in NOLA and the courts were swamped.

https://www.cnbc.com/2020/07/10/looming ... -says.html
https://abcnews.go.com/Business/wireSto ... r-71801849
https://www.pressherald.com/2020/07/21/ ... el=related
https://www.msn.com/en-us/finance/reale ... r-BB173Y8r



I have said this many times COVID is 2 disasters in 1. The illness will end at some point but the economic damage will be with us for likely a generation. (BTW I hope I am wrong on that last point.)
Duco Ergo Sum


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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Thu Jul 23, 2020 12:14 pm

So important, it's worth repeating twice :clownshoes:

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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Thu Jul 23, 2020 12:59 pm

MPMalloy wrote:
Thu Jul 23, 2020 12:14 pm
So important, it's worth repeating twice :clownshoes:
Thanks dreaded DBL post deleted.

Some more interesting news.

The USD is sinking in value to gold, silver and other Forex. Potentially that is means US produced goods are now cheaper if paying in Swiss francs, Australian $ and even Euros. However in view of the fact that so few items are US made now that really means that the US consumer will be paying more to import the foreign manufactured items.
https://finance.yahoo.com/news/asia-mar ... 18093.html


This article should be filed under the heading of the bleeding obvious, but still it has some interesting takeaways.
https://finance.yahoo.com/news/u-weekly ... 52649.html
ECONOMIST WARNS: U.S. 'cannot carry on for long' with 32 million unemployed
This is opinion and NOT investment advice:
If you are in the US equity market you may want to consider taking profits this week.
Duco Ergo Sum


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Re: Global Debt Time Bomb explodes soon

Post by TacAir » Sat Jul 25, 2020 10:56 am

found the graphic linked below while surfing the web It shows how much each country gets from the US in 'foreign aid' The graphic itself is too large for the board software to handle.

(https://d3axvdqkyu09xk.cloudfront.net/a ... peg.80858/)
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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Sat Jul 25, 2020 12:31 pm

TacAir wrote:
Sat Jul 25, 2020 10:56 am
found the graphic linked below while surfing the web It shows how much each country gets from the US in 'foreign aid' The graphic itself is too large for the board software to handle.

(https://d3axvdqkyu09xk.cloudfront.net/a ... peg.80858/)
I'm not understanding some countries that are as "wealthy" as the US is, are getting as much as they are.

Outside of military aid, I guess.

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Re: Global Debt Time Bomb explodes soon

Post by TacAir » Sat Jul 25, 2020 11:07 pm

What struck me is just how many get anything at all. and all in millions!
Last edited by TacAir on Tue Jul 28, 2020 5:07 pm, edited 1 time in total.
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Re: Global Debt Time Bomb explodes soon

Post by MPMalloy » Sun Jul 26, 2020 12:19 pm



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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Thu Aug 06, 2020 3:44 pm

This is not good at all.

https://www.cnbc.com/2020/08/06/in-cali ... again.html
Indeed, more than half of people who recently applied for unemployment benefits in the Golden State had lost their jobs (or had their hours cut) again after having returned to work, according to an analysis published Thursday by the California Policy Lab.
Duco Ergo Sum


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Re: Global Debt Time Bomb explodes soon

Post by boskone » Thu Aug 06, 2020 5:08 pm

raptor2 wrote:
Thu Aug 06, 2020 3:44 pm
This is not good at all.

https://www.cnbc.com/2020/08/06/in-cali ... again.html
Indeed, more than half of people who recently applied for unemployment benefits in the Golden State had lost their jobs (or had their hours cut) again after having returned to work, according to an analysis published Thursday by the California Policy Lab.
Can't have an economy if everyone's sick, can't have one if everyone's locked down to keep from getting sick.

Not a fun time.

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Re: Global Debt Time Bomb explodes soon

Post by williaty » Thu Aug 06, 2020 8:31 pm

boskone wrote:
Thu Aug 06, 2020 5:08 pm
raptor2 wrote:
Thu Aug 06, 2020 3:44 pm
This is not good at all.

https://www.cnbc.com/2020/08/06/in-cali ... again.html
Indeed, more than half of people who recently applied for unemployment benefits in the Golden State had lost their jobs (or had their hours cut) again after having returned to work, according to an analysis published Thursday by the California Policy Lab.
Can't have an economy if everyone's sick, can't have one if everyone's locked down to keep from getting sick.

Not a fun time.
Yeah this is what drives me bonkers that so few people get: We had a policy choice of economic disaster with many deaths/permanent disabilities or economic disaster with fewer deaths/permanent disabilities. We had no policy option for "no economic disaster". We could ruin the economy because we tried to save everyone or we could ruin the economy because everyone was afraid of not being saved.

In the end, the US decided to choose both.

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Re: Global Debt Time Bomb explodes soon

Post by boskone » Thu Aug 06, 2020 9:51 pm

williaty wrote:
Thu Aug 06, 2020 8:31 pm
boskone wrote:
Thu Aug 06, 2020 5:08 pm
raptor2 wrote:
Thu Aug 06, 2020 3:44 pm
This is not good at all.

https://www.cnbc.com/2020/08/06/in-cali ... again.html
Indeed, more than half of people who recently applied for unemployment benefits in the Golden State had lost their jobs (or had their hours cut) again after having returned to work, according to an analysis published Thursday by the California Policy Lab.
Can't have an economy if everyone's sick, can't have one if everyone's locked down to keep from getting sick.

Not a fun time.
Yeah this is what drives me bonkers that so few people get: We had a policy choice of economic disaster with many deaths/permanent disabilities or economic disaster with fewer deaths/permanent disabilities. We had no policy option for "no economic disaster". We could ruin the economy because we tried to save everyone or we could ruin the economy because everyone was afraid of not being saved.

In the end, the US decided to choose both.
Even that's an oversimplification. It's not incorrect, but neither is it correct.

The problem, especially in the US, is trying to apply the same rules everywhere. What makes sense for somewhere like NYC is nonsensical for somewhere like where I live in rural Texas. I mean, forget 2 meters separation, I rarely get with 10 meters of anyone, and that's fairly normal around here. They could have gotten an adequate lockdown by just banning BBQs and dine-in.

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Re: Global Debt Time Bomb explodes soon

Post by raptor2 » Fri Aug 07, 2020 11:42 am

boskone wrote:
Thu Aug 06, 2020 9:51 pm

Even that's an oversimplification. It's not incorrect, but neither is it correct.

The problem, especially in the US, is trying to apply the same rules everywhere. What makes sense for somewhere like NYC is nonsensical for somewhere like where I live in rural Texas. I mean, forget 2 meters separation, I rarely get with 10 meters of anyone, and that's fairly normal around here. They could have gotten an adequate lockdown by just banning BBQs and dine-in.

QFT!


Common sense is never very common when it comes regulations and EO. The US is not NYC, LA or any other major city. It is a diverse region where simply turning off business does not make sense.This is a disease spread by close contact. NYC's needs are different from those of less dense areas.

Instead the local and state folks decided to shut down everything and apply the one size fits all approach.
It is almost as if they wanted the economy to fail for their own personal reasons

A better, more sensible approach would have been to isolate those at risk and those diagnosed. This is what was done with measles, polio, thyphoid and other communicable diseases in the 2oth century. They dealt with more severe risks in a more sensible manner.

Hell it would have been cheaper to pay people diagnosed to stay home and put those at risk up in a hotel with room service.

Kinda like this:
https://www.latimes.com/california/news ... california
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Re: Global Debt Time Bomb explodes soon

Post by williaty » Fri Aug 07, 2020 12:07 pm

raptor2 wrote:
Fri Aug 07, 2020 11:42 am
boskone wrote:
Thu Aug 06, 2020 9:51 pm

Even that's an oversimplification. It's not incorrect, but neither is it correct.

The problem, especially in the US, is trying to apply the same rules everywhere. What makes sense for somewhere like NYC is nonsensical for somewhere like where I live in rural Texas. I mean, forget 2 meters separation, I rarely get with 10 meters of anyone, and that's fairly normal around here. They could have gotten an adequate lockdown by just banning BBQs and dine-in.

QFT!


Common sense is never very common when it comes regulations and EO. The US is not NYC, LA or any other major city. It is a diverse region where simply turning off business does not make sense.This is a disease spread by close contact. NYC's needs are different from those of less dense areas.

Instead the local and state folks decided to shut down everything and apply the one size fits all approach.
It is almost as if they wanted the economy to fail for their own personal reasons

A better, more sensible approach would have been to isolate those at risk and those diagnosed. This is what was done with measles, polio, thyphoid and other communicable diseases in the 2oth century. They dealt with more severe risks in a more sensible manner.

Hell it would have been cheaper to pay people diagnosed to stay home and put those at risk up in a hotel with room service.

Kinda like this:
https://www.latimes.com/california/news ... california
Overall, your objections make no sense in the face of a disease that can be transmitted before you know you're sick. Everywhere needs to have restaurants/bars/salons/movie theatres/churches/etc closed because no one can know whether the people coming in are contagious. The virus doesn't give a shit if your population density is 1 person per square mile. All that matters is that 10 of you lined up at the counter at Joe's Cafe for the morning bitching session over breakfast. The virus doesn't care if you normally go a week without seeing another human but there's 13 unmasked people in the hardware store when you come to town for more fencing wire. The non-pharmacological interventions needed don't vary by state. All the interventions need done in all the states because nowhere in the US actually has this under control. The only thing that should be varying across the country is what degree of "essential" is required to be one of those open essential businesses. Food is clearly essential everywhere. Utility service is clearly essential everywhere. That theoretical hardware store is only essential enough to be open in places where there's not currently refer trailers full of bodies.

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