The economic suicide of America in the fiscal cliff deal. China & the USD's status as Global Reserve currency. My latest Huffy Po comments

Comment 1

The politicians are still winning. They have split you down the middle blaming the other side. 

The leadership of both parties is equally at fault in protecting large Corporate interests and not supporting the interests of ordinary people - or America. 

Only the top 0.1% and the large Corporations won in the fiscal cliff deal.

Everybody else lost. 

Including America which is now going to see a recession in 2013 because of this abomination of a fiscal cliff deal.

Comment 2

The fiscal Cliff deal is economic suicide for the US and guarantees a recession in 2013. 

A huge $200bn tax hike on the middle class and poor. 
People will have less money to spend. Something between 3 and 4% less money. 

Goldman Sachs is cutting it's GDP growth forecast by 3.5% because of the Fiscal Cliff deal. 
Goldman Sachs was predicting +2.5%, now it predicts recession.

This is enough to tip every GDP forecast negative. 

Tax hikes in Spain led to widespread economic contraction - the same thing is going to happen in the US in 2013. There is a pan European deep recession just started. 

Instead of raising personal taxes, especially on the middle class and the poor, the politicians should of cut the $1tn+ of annual Corporate Welfare.

Corporate profits are at record levels and are not the problem we face. 
It is EVERYTHING ELSE. 

ALL of the Corporate Welfare was kept including the $69bn that was about to expire. It was extended in the "Taxpayer Relief Act". 
The only Taxpayers that got relief were large Corporations on their record Corporate profits. 

There are very easy savings of over $1tn a year that could be made to Corporate Welfare. 
Google "ian56 very easy" for the list 

(It is very difficult to get comments on Huffy Po published if they have links - here is the one in question.)
http://ian56.blogspot.co.uk/2012/11/it-is-very-easy-to-cut-1tn-from-federal.html

Over $500bn of savings on military spending and over $500bn on other forms of Corporate welfare. 

Google "ian56 Fiscal Cliff deal financial analysis" 
for a breakdown of the Fiscal Cliff deal and what it actually means.
http://ian56.blogspot.co.uk/2013/01/fiscal-cliff-deal-obamas-corporate-sell.html

Comment 3

Real numbers are now coming out after the election. 

November's trade balance was a $48bn deficit well above expectations of $41bn. 
This will cause slight downward revisions to 4th qtr GDP, probably enough to take it below a 1% annualized rate.


Comment 4

The Fed is effectively buying up all new government debt. 

They have stated they will buy $540bn of Treasuries and $480bn of Mortgage backed Securities. 

The Fed's balance sheet is expected to grow to about $4tn by the end of 2013.
It was $880bn in 2008. 
There are no plans to ever end the current Fed program of buying up US debt.  

There is a shortage of buyers for US debt, at least at current interest rates - so the Fed is buying it. 

China is no longer buying US Treasuries, in fact they reduced they holdings slightly by $100bn to just over $1tn over the last year or so.”

Comment 5

The government is going to keep spending and wasting taxpayer money like dishwater until the rest of the world cries "Enough", loses confidence in the Dollar and the Dollar loses it's Global Reserve Currency status. 

Then we will see the dollar lose over half of it's value within a short space of time. 
That will bring on a crash of monumental proportions. 

Nobody knows when the rest of the world will come to the realisation that the US will never repay it's debts. 
China and Russia have - they are getting out of US Treasuries - Russia has already done so. 

Greece first got into trouble when it's debt to GDP ratio reached 160% in 2009.
The interest rate at which the Greek government rose from 2% to 7% in a short space of time and it could no longer service the debt. 

By 2016, America will have reached that sort of debt/GDP level. 

China and Russia are forming a non USD trading coalition to bypass the dollar. 
India, Brazil and Japan are already on board. 
South Africa and Australia are joining. 
Half of Africa and Germany are interested. 

The Brics discussed the idea of forming a "Brics bank" in New Delhi in March 2012. 
This would be a direct competitor to the Fed which currently largely dictates global monetary policy. 

There have been 5 Global Reserve currencies since 1500. 
The USD is just the latest. The government is shortening the timespan that it lasts for.”

Comment 6

In reference to Obama's upcoming State of the Union address.

That shouldn't take long. 

"We are f*cked" 

should just about cover it


Addendum

The details of China's recent trade deals to marginalise the US Dollar.

http://ian56.blogspot.co.uk/2012/02/greek-scenario-and-us.html