SDNR

Many economists believe the world is heading for major economic turmoil - put simply, the Western world is living way beyond its means - the most frightening example is the USA -the world's largest economy is in serious trouble.

Take an example by the British financier and author Jim Mellon; ....every man, woman and child in the US imports approximately $16 worth of foreign products every day, but they only export $9 - there is a gap of $7 - now 7 dollars every day for every man, women, and child in America (285 million) multiplied by 365 days a year = $650 billion of deficit - The US national debt is over $8 trillion - and the Chinese and Japanese central banks buy the US government debt - but sooner or later the US will have to pay it back - check this website - ONLY REGISTERED AND ACTIVATED USERS CAN SEE ALL LINKS - CLICK HERE TO REGISTER. Also we are seeing huge job losses - Ford has just announced that it will be dropping a quarter of it's workforce.

Of course the US is not alone, the entire western world is living well beyond it's means - many people are living with vast personal debt while others have invested much [borrowed] money in over-inflated real estate markets.

Western manufacturers are finding it impossible to compete with cheaper imports (or labour costs) from Eastern Europe and particularly China.

Here is a recent book you might find interesting - it is about this looming international crisis.
- ONLY REGISTERED AND ACTIVATED USERS CAN SEE ALL LINKS - CLICK HERE TO REGISTER=

Here is an interesting article.
- ONLY REGISTERED AND ACTIVATED USERS CAN SEE ALL LINKS - CLICK HERE TO REGISTER

EnI

No, no, no ...

Everything will be OK.

Just ignore the crisis and all the bad stuff, and they will disappear.

SDNR

HA - if only - I know a few people who are like that - they live so well...yet have virtually no money - thank God for credit cards aye.. he he he

450SEL6.9

I haven't read Jim Mellon's book, but I've read his comments on the global economy. I think he's spot on. I've been planning to read it though, but can't seem to find it in a brick and mortar book store.

Debts must be repaid and American property owners don't seem to realize that. I think some of the more regional US banks might be hurt severely. Borrowing short and lending long against property is the classic way a bank gets into trouble. Mellon in particular is bearish about global property. I believe any global economic collapse will start will the American property bubble bursting. I've said before household debts are at depression-era levels. Most economic analysts say rubbish like it's different this time and that GDP growth in the US is strong at 4 percent-plus. By the way, GDP was growing at 5 percent before 1929.

Roberto, I have a family friend who lives very well with four properties near San Franciso and Simi Valley, but he's really skint with no money. He's a rising chef at a local restaurant and doesn't earn enough to pay four mortgages, then again not many people do. I asked him how he can afford it. He said he has a mortgage that allows him to borrow some of the interest! What the bloody hell? It's the anti-mortgage and what a mortgage should not be! The principal owing should go down after each payment, not rise further. I also asked him what he'll do if the collateral, the property, falls in value. I'm still awaiting my response. I don't know why property has become so hot all of a sudden and it's very international, not just Asia, Europe or Australasia. The artificially low interest rates can't explain all of the gains in property prices. Any ideas?

Yannis

No nation or no person can live with borrowed money for ever that's for sure. My question is since most countries in the world are bunkrupt or have to borrow money who is actually lending them? Do banks actually have the huge amounts of money to lend to nations or we are living in a world where wealth and debts are virtual?

450SEL6.9

A nation can live with borrowed money so long as they can print money, find buyers for their bonds or massive inflation.

To answer your question, Yannis, the money comes from Central Banks and particularly, the reserves of foreign currency and foreign bonds that each hold. The Chinese have been buying American bonds for the past years. The Japanese are the largest owners of US government paper. If or when they sell, since the US dollar is unsound, the American economy is in a heap of trouble. Dollar falls, yields rise and maybe the property bubble has burst. If the US goes into a severe recession, there'll be a global recession. China is not autonomous from the rest of the world regardless of what those crooked economists and stock market analysts like to think. I don't see how they think China can keep growing at 9, 10 percent without a strong American economy.

SDNR

LOL - it sure is crazy - much like people with 10 credit cards that they use to just keep shifting [and accumulating] debt - I don't know how they can sleep - I would have stomach ulcers...with worry.

I think the US is in for some very tough times (as is the Western world as a whole) - many Americans are likely to see a significant drop in their standard of living over the coming years.

SDNR

Ha - it's interesting isn't it - the thing is, a sizable percentage of the world's wealth doesn't actually exist - rather, it is money owed (with interest of course). Debt in itself isn't necessarily a bad thing - companies borrow money in order to expand etc.. and in turn help grow an economy - the problem is when individuals [particularly] in large numbers borrow money just to buy "stuff" (plasma televisions, the new Mercedes, a holiday house in southern France) - the purchasing of these things will stimulate an economy for a while and even create employment in the retail sector, but long term it is not productive, and eventually things either slow down...or crash.

450SEL6.9

I have no problem with people borrowing at low interest rates to invest for the future. It's just an investment loan. Most people who take equity out of their homes with subsequent mortgages and remortgages are just buying consumption items or goods that rapidly lose their value. A car is a good feel-good purchase to prove you have indeed arrived at a certain status, but it is the worst investment you can make since you're nearly guaranteed to lose money.

The problem is that all economies are so connected today. A severe recession in the US cut put the brakes on economic growth, especially unsustainable growth in parts of Asia.

Giannis

BTW, guys what do you think of your local economy?

As for me, i think that economy is neither in a good nor in a very bad situation. It think we are exactly in the middle. I work for a company which has to do with houses and staff. We sell high quality products, but the target group is people oh upper-middle or high income, who build or reconstruct (right verb?) their houses. What i see, is that we have less customers that some years ago (same goes for the other companies with the same products), but those customers have much money, they demand much, they are willing to pay as money is needed, and they buy many more staff that others. We still have some middle income customers who buy our products (but not the high-ends), but sadly they are not many, and almost all of them pay in a monthly payment system, with a bank.