pacalis

The Destruction of the Dollar: It's Nearly Inevitable

It's very simple. The banks don't flip in Canada. They make their money of the interest rate spread and need to hold the mortgage to profit. In Canada most consumers haven't heard of "points."

The US mortgage system is designed to flip. The banks make loads of fees off of points and other charges with Fannie and Freddie holding the loan, or they package the loans and sell it to some retarded pension fund or European bank. The more transactions the US banks make, and the less they hold, the more they profit.

Ten Reasons for an Imminent Stock Market Crash

I find this analysis simplistic. We can go point by point if you like.
1. Services are the least sticky in terms of geography - so it's hard to book a long term comparative advantage in services. Moreover, they can be eroded by IT. BTW people aren't coming to the US for services, services (financial, healtcare etc...) are shifting overseas.
2. I agree, US GDP will grow much more than $13T. That's becuase your metric of value is price in USD which is falling.
3. Massive trade IMBALANCE (not balance) you mean. And it's not rebalancing. The rate of growth in the trade gap has slowed, but it's still a gap adding to our debt obligations every quarter. It's like using our credit card to pay our minimum balance on our credit card. Eventually it ends. Here's a lesson though, we can pay for our (fixed) debt if we inflate our obligations away, which is not the point your making.
4. If you're thinking the key to US productivity is its educated labor force, a point that I agree with, you should be alarmed by trends in the comparative strenght of the US labor force. So stop chuckling. And stay in school.

On Oct 01 11:19 AM Peter Iwanowicz wrote:

> I always chuckle a bit when I read statements like this. Mostly because
> they are just that; statements with little to no contextual proof.
>
>
> 1. While its true that US manufacturing has dropped relative to services,
> this is not a bad thing. In fact, from a international finance textbook
> POV we want this to happen. It's gains from trade 101. Other countries
> can provide goods at a lower cost than we can, they specialize in
> it, we pay less for them, our real wage goes up.
>
> 2. The US can issue the amount of debt we can because the "collateral"
> on that debt (US tax dollars) is arguable the biggest in the world
> and the cash flow is pretty guaranteed. As long as the US continues
> to generate a $13T GDP and growing, we should be able to issue debt
> as we please.
>
> 3. Every time people say we run a MASSIVE trade balance I immediately
> understand how inept they are at understanding Int. Trade. First
> of all, the US CA is ~1.0% of GDP. Are you really saying that if
> we went from -1.0% of a drag on GDP to -1.5% our economic system
> would be a wreck?? Laughable. Second, contextually there is NOTHING
> wrong with a negative CA. It just means that (in the US's case) we
> didn't value savings very highly because the cost to spending and
> not save, the interest rate giving up by not saving, was very low
> for some time. The CA has recently begun to rebalance because Americans
> are saving again (I wonder WHY?)
>
> 4. Oh btw in economic classes, we usually breakdown output of various
> entities (countries, companies, etc.) into two groups, goods and
> services. Just because we don't produce goods doesn't mean we cannot
> have a growing economy. In fact, I would argue since Americans have
> one the most educated labor forces, we are benefiting by gains of
> trade by focusing on being the most productive in producing services
> (health care, financial, legal, etc.). Also reread point #1.