Domain Manage

How long before the USA defaults or they get hyperinflation?

Discussion in 'General Board' started by italiandragon, May 1, 2011.

Thread Status:
Not open for further replies.
  1. italiandragon

    italiandragon Active Member

    Joined:
    Mar 2006
    Posts:
    296
    Likes Received:
    2
    An extract from:

    http://www.theaustralian.com.au/bus...tch-above-greece/story-e6frg90o-1226043633361

    – Capitol Hill has been consumed with political wrangling over whether to increase a $US14.3 trillion ($13.3 trillion) debt ceiling that is due to be breached next month.

    If the US national debt hits that level, it would trigger a default.

    Deutsche Bank's analysis acknowledged that the risk attached by financial markets to US debt remained very low, as demonstrated by the country's modest borrowing rates. That was in part due to the US dollar remaining the premier reserve currency for world governments.

    However, the report noted: "Reputation and reserve currency status can be lost, and failure to move US fiscal policy off its currently unsustainable path would certainly increase the risk."


    McDonalds Hires 62,000, Turns Away Over 938,000 Applicants For Minimum Wage, Part-Time Jobs

    http://www.zerohedge.com/article/mc...938000-applicants-minimum-wage-part-time-jobs

    http://www.google.com/hostednews/ap...3TZL0w?docId=4d28a118fd5146c190bbef2e2c4b9ab3


    The government now borrows about 42 cents of every dollar it spends. Imagine that one day soon, the borrowing slams up against the current debt limit ceiling of $14.3 trillion and Congress fails to raise it. The damage would ripple across the entire economy, eventually affecting nearly every American, and rocking global markets in the process.

    China and other countries that now hold about 50 percent of all U.S. Treasury securities could start dumping them, further pushing up interest rates and swelling the national debt. It would be a vicious cycle of higher and higher interest rates and more and more debt.
     
  2. Domain Forum

    Acorn Domains Elite Member

    Joined:
    1999
    Messages:
    Many
    Likes Received:
    Lots
     
  3. italiandragon

    italiandragon Active Member

    Joined:
    Mar 2006
    Posts:
    296
    Likes Received:
    2
    What happens if Congress blows the debt ceiling?

    http://money.cnn.com/2011/04/29/news/economy/debt_ceiling/index.htm?iid=HLM


    Let me explain this with some pictures.


    This IS inflation:


    [​IMG]


    while this WAS hyperinflation, after WW2 in Berlin:


    [​IMG]



    and here some additional recent information:


    [​IMG]

    The problems in my humble opinion, started in 1971 when the US changed the way things worked till then, backing the country wealth with gold. Since 1971, it does not happen anymore:

    http://money.howstuffworks.com/currency7.htm

    A recipe for a disaster.

    And as we deal a lot with US domainers and US currency, this is a big problem.

    In other financial and travel forums I read more and more Americans have started buying silver, gold, platinum, Euros, Australian dollars and foreign property in a strategy to hedge the USD collapse. You can just google for more info. It's not a surprise to see the AU$ at a new record nearly each day since it was floated many years ago. Same for gold and silver....but some experts warn that this is just the tip of the iceberg if things keep going this way.....meanwhile Wall Street is living on its own world with already new IPOs that look like we are well in the middle of the bubble cycle. The Chinese version of Facebook Renren is about to hit the market with a ridiculous (that's my opinion as an expert financial adviser) price-to-revenue ratio of 52 and a price-to-operating profit ratio of 519. (For comparison, Google's price-to-revenue ratio has been hovering around 5.5-6.5 for most of the last year and its market-cap-to-operating-profit-ratio using data for 2010 is 15.6.)

    http://tech.fortune.cnn.com/2011/04/20/how-renrens-ipo-is-setting-the-table-for-facebook/

    In my opinion, the whole toy is broken and they are just delaying a solution. The more they wait, the worse it will be for everyone.

    Silver went from $10 to $49.90/ounce.

    Inflation is alright high...I'm sure Americans see it at the pump when they need to get gas.

    But what I expect if they do not fix this A.S.A.P. is not really a nice scenario. The past GFC will look like a walk in the park.
     
  4. mat United Kingdom

    mat Well-Known Member

    Joined:
    Apr 2007
    Posts:
    3,782
    Likes Received:
    73
    and still going :cool:
     
  5. italiandragon

    italiandragon Active Member

    Joined:
    Mar 2006
    Posts:
    296
    Likes Received:
    2

    :) it took a hit finally...but the trend may be not compromised.

    Anyway, some fresh news....


    Deadline extended:

    Geithner Extends Debt-Ceiling Deadline by Three Weeks to August

    http://noir.bloomberg.com/apps/news?pid=20601108&sid=auDvszpXldq4

    Some quotes from the article:

    If Congress doesn’t raise the limit by May 16, the Treasury will declare a “debt-issuance suspension period” under the statute governing the Civil Service Retirement and Disability Fund, Geithner said. That will allow the U.S. “to redeem existing Treasury securities held by that fund as investments.”

    ‘Next Steps’

    Geithner’s letter shows that “the mechanics are now in motion” for the government to take the “next steps” if the debt limit isn’t raised, said Drew Matus, a senior economist at UBS Securities LLC in Stamford, Connecticut.

    Though the extended August deadline “in theory gives Congress additional time to complete work on increasing the debt limit, I caution strongly against delaying action,” Geithner said in the letter. “The economy is still in the early stages of recovery, and financial markets here and around the world are watching the United States closely.”

    Matthew Zames, chairman of a Treasury advisory panel and a managing director at JPMorgan Chase & Co., said last week that failure to raise the limit could be “catastrophic.”

    “Any delay in making an interest or principal payment by Treasury even for a very short period of time would put the U.S. Treasury and overall financial markets in uncharted territory, and could trigger another catastrophic financial crisis,” Zames, chairman of the Treasury Borrowing Advisory Committee, wrote in a letter to Geithner.
     
  6. JMOT

    JMOT Well-Known Member

    Joined:
    Feb 2007
    Posts:
    1,012
    Likes Received:
    23
    Will this make the $ better value against the £??
     
  7. DomainManagement

    DomainManagement Active Member

    Joined:
    Mar 2010
    Posts:
    528
    Likes Received:
    5
    i Dont think China will let America get away with playing any sharp games

    and they have already let them know this. and most wealthy Chinese have

    been buying commodities with dollars .

    do we sense a time of the horrible Rothschild`s dream of a single world

    currency rearing is ugly head.

    yes it sounds like its getting harder most folks i know that are into the banks are
    saying that the banks are requesting more collateral against existing loans
    on property , sounds like when we get the interest rest rate rise`s and they will come , that it will be more repo`s and more lack of confidence

    hope i am wrong but it looks like the next stage in the cycle
     
  8. diablo

    diablo Well-Known Member

    Joined:
    Nov 2005
    Posts:
    1,567
    Likes Received:
    28
    The US is already devaluing its currency by printing unknown quantities of dollars. Not unlike what quantative easing is doing to the pound.


    In any case, it's the US that should be worried. If China decided to sell instead of support the dollar, it's game over.
     
  9. afx United Kingdom

    afx Active Member Exclusive Member

    Joined:
    Oct 2005
    Posts:
    275
    Likes Received:
    3
    It's not too difficult to avoid -- simply start another war as the US has always done; there is no industry as profitable as war.

    The US debt like England's was never meant to be paid off. When the frogs royally kicked our arses at the battle beachy head in 1690 which bankrupted the country, the bank of England was set up with private funds which would ensure favour to those providing the funds and serfdom for the rest -- never was it envisaged to repay the loans. That is how it has always been and always will be. There was a cost to becoming the most dominant power of the late 18th century and we're still paying; indefinitely it would appear.
     
  10. diablo

    diablo Well-Known Member

    Joined:
    Nov 2005
    Posts:
    1,567
    Likes Received:
    28
    Times are rapidly changing. Few could have foreseen the fall of the Roman Empire or even the British Empire.

    Nobody knows how much gold the US holds. It isn't independently audited and hasn't been for years. They may or may not hold the most reserves. Either way, it's nowhere near enough. Even on the declared figures, they hold maybe three times the gold that the likes of Italy hold. That puts their supposed holding into real perspective.

    As for the Keynes quote, it doesn't stand up in the real world. If you owe the bank a million and think it is the bank that has the problem, you need to think again. If they want that million back and you can't pay, you really do have a problem. Just ask any business person who has been in that position and has lost everything.
     
  11. binny

    binny Active Member

    Joined:
    Jul 2007
    Posts:
    835
    Likes Received:
    13
    I hope the arse falls out of the dollar before I go to Florida!
     
    • Like Like x 1
  12. italiandragon

    italiandragon Active Member

    Joined:
    Mar 2006
    Posts:
    296
    Likes Received:
    2
    So after yesterday the commodities market went into panic mode with OIL losing nearly 10 % in one go and SILVER continuing a sharp decline (-30% in 4 days), today we hear about the rising inflation from Bloomberg as well.

    These are the early signs of what in few years could ruin the savings of each American family.

    How long before you raise your domain prices when dealing with American buyers?


    http://noir.bloomberg.com/apps/news?pid=20601109&sid=ahEOfkKdNVvY&pos=11

    Restaurants Lift Prices as Inflation Hawks See Fed Lag Curve (1)
    Share Business ExchangeTwitterFacebook| Email | Print | A A A
    By Anna-Louise Jackson and Anthony Feld


    May 6 (Bloomberg) -- Dining out will cost more this year as U.S. restaurants take advantage of the nearly two-year long expansion to boost prices on food and drinks.

    Higher-priced menus reflect growing confidence by eateries that consumers can afford to pay more to eat out. Restaurants are emboldened in part by the success of U.S. airlines, which have raised fares almost 10 percent since a year ago, according to Dean Maki, chief U.S. economist at Barclays Capital in New York.

    “The fact that the airline industry was able to pass along cost increases signals that the pricing environment has become somewhat more favorable than it was during the heart of the recession,” Maki said. “It’s more likely restaurants will be able to pass along price increases now relative to the last few years.”

    Higher food and fuel costs are spurring menu changes, which are reflected in the food-services category of the personal- consumption-expenditures price index. Purchased meals and beverages, which make up about 6 percent of core PCE, rose nearly 2 percent in March from a year ago, the biggest increase since November 2009, according to data from the Bureau of Economic Analysis in Washington.

    Several apparel companies -- including San Francisco-based Levi Strauss & Co., which supplies jeans to retailers in more than 110 countries -- also have announced increases to offset higher costs for cotton, foreign wages and freight. With imported-clothing prices rising at the fastest rate in at least a decade, retailers stand a better chance of exerting pricing power, Maki said.

    Pressure on the Fed

    All this puts pressure on the Federal Reserve to prevent inflation from getting out of hand, said Samer Nsouli, chief investment officer in New York for the Lyford Global Macro Fund.

    “Inflation hawks see restaurants and airlines passing through higher prices and say the Fed’s behind the curve,” Nsouli said. “The Fed’s not paying enough attention to such trends when it comes to its continued accommodative monetary policy.”

    The central bank’s Federal Open Market Committee said it “will pay close attention to the evolution of inflation” in the statement for its April 27 meeting, when it kept the target for the federal funds rate, or overnight inter-bank lending rate, at zero to 0.25 percent. It first set the rate at the record low in December 2008. The Fed also reaffirmed at the April meeting its plan to complete a $600 billion Treasury purchase program by June.

    ‘Transitory’ Threat

    Fed Chairman Ben S. Bernanke and his chief deputies on the FOMC -- Fed Vice Chairman Janet Yellen and New York Fed President William C. Dudley -- have said in recent speeches that the committee’s leadership believes the threat from accelerating prices will prove “transitory.” Even so, policy makers have been bumping up their forecast for 2011 core inflation, which excludes food and fuel. The April projection is about 1.5 percent, compared with about 1.2 percent in January.

    Restaurants have projected menu increases of 1.8 percent during the next six months, the most in a year, according to research by RBC Capital Markets. The amount depends on the type of food they serve, said Larry Miller, an RBC analyst in Atlanta. In the same period, the companies are forecasting a rise of at least 3.2 percent in their commodity costs, the research showed.

    Rising Unemployment

    The industry’s ability to pass along higher input costs depends on diners’ ability to pay more. The unemployment rate rose to 9 percent in April after dropping to 8.8 percent in March, still below a post-recession peak of 10.1 percent in October 2009. The Bloomberg Consumer Comfort Index fell to minus 46.2 in the week ended May 1, the second consecutive weekly decline.

    Customer traffic still has improved from last year and “trends have been decent in terms of demand, so restaurants have a little more confidence to raise prices,” Miller said.

    The Standard & Poor’s Supercomposite Restaurants Index, which includes McDonald’s Corp., The Cheesecake Factory Inc. and 25 other companies, has risen by 43 percent since December 31, 2007, while the S&P 500 Index has declined by 8 percent.

    McDonald’s boosted menu prices in the U.S. by 1 percent in March, Chief Financial Officer Peter Bensen said on an April 21 conference call. The Oak Brook, Illinois-based fast-food chain had resisted such a move since 2009, said Miller, who upgraded McDonald’s stock in January to “outperform” from “sector perform.”

    ‘Inflationary Environment’

    “Our upgrade was driven by the belief that fast-food models, like McDonald’s, thrive in a modest inflationary environment and that they would be able to successfully implement price increases in 2011,” Miller said.

    BJ’s Restaurants Inc. expects to boost menu prices for the full year by about 3 percent to offset rising food and energy costs, Chief Executive Officer Gerald Deitchle said on an April 20 conference call. Like McDonald’s, the Huntington Beach, Calfornia-based company didn’t raise prices the past few years at its namesake brewery, pizza and grill chains, Deitchle said.

    Cheesecake Factory, based in Calabasas Hills, California, is monitoring input costs after rolling out a 0.7 percent rise at its 150 casual-dining restaurants earlier this year, Chief Financial Officer Douglas Benn said on an April 20 conference call. The company currently projects a further boost of at least 1.4 percent later this year, he said.

    “We will implement a higher level of menu-price increases in our upcoming summer menu change if commodity-cost pressures continue at the current level,” Benn said.

    Food Quality

    Cheesecake Factory, BJ’s and McDonald’s are among a group of “haves,” according to Steve West, an analyst at Stifel Nicolaus & Co. in St. Louis. These are restaurants that can push through moderate price changes, though they likely won’t be menu-wide, West said. He includes Chipotle Mexican Grill Inc. in this group because it has focused on improving food quality and the customer experience during the recession.

    “If anyone has pricing power, it’s Chipotle,” said West, who maintains a “buy” rating on the stock.

    The Denver-based burrito chain, which McDonald’s spun off in 2006, will wait to raise prices until the third quarter, allowing it time to “see the magnitude and timing of inflation and assess the customer reaction to price increases at other restaurants,” Chief Financial Officer John Hartung said on an April 20 conference call.

    The restaurant industry will serve as a test of the retail sector’s pricing power, Maki said.

    ‘Stronger Position’

    “Consumers are in a stronger position now because their labor income has been improving, but the surge in gasoline prices has moderated the recent growth in their purchasing power,” Maki said.

    For Yum! Brands Inc. -- the Louisville, Kentucky-based owner of KFC, Pizza Hut and Taco Bell fast-food chains -- potential price changes in this environment are a balancing act, Chief Financial Officer Richard Carucci said on an April 21 conference call.

    “When you have inflation and our sales are soft, you have to play it pretty smartly,” Carucci said.

    To contact the reporters on this story: Anna-Louise Jackson in New York at ajackson36@bloomberg.net; Anthony Feld in New York at afeld2@bloomberg.net

    To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

    Last Updated: May 6, 2011 11:06 EDT
     
  13. JMOT

    JMOT Well-Known Member

    Joined:
    Feb 2007
    Posts:
    1,012
    Likes Received:
    23
    still trying to work out if the US fecks up will this make the USD better value against the GBP?? :cool:
     
  14. websaway United Kingdom

    websaway Well-Known Member

    Joined:
    Mar 2007
    Posts:
    4,707
    Likes Received:
    84
    You don't have to be a rocket scientist to know that when there's no petrol left in the tank the car won't function normally.
     
Thread Status:
Not open for further replies.

Share This Page