Why in the world would the US have the "highest probability?" In Greece you have nazis gaining political power (Golden Dawn). In Italy the PM recently advocated a suspension of democracy for the sake of saving the euro - a path to Mussolini style fascism. In Spain the investment outflows are worse than Indonesia's at the height of the Asian financial crisis. Across all of Europe youth unemployment is reaching catastrophic levels, in turn creating dry tinder for extremist movements and nationalist political parties. Even Britain is ratcheting up police state measures in response to increasing riots and Muslim discontent. The United States is an oasis of calm in contrast - and China is already a police state, by the way, with extra-judicial prisons for Communist Party members. I don't "hope" anything in regard to what will happen with the US so much as laying out various factors / inputs - and, re, energy boom / technology boom, such would be knowledge and demand driven and would contribute to a strengthening US economy, not be impeded by weakness. I wholly agree that bad things can happen anywhere, including the US, and that the entire world has serious pain ahead. But in terms of a simple assessment of advantages vs disadvantages, the US is undoubtedly in a better spot relative to Europe, China, Latin America etcetera. I suppose Singapore has a better hand to play, but they are more of a city-state than a nation-state.
why the US would have the "highest probability"? because they don't realise that they have taken all the necessary steps in that direction. And you just need an "event" to precipate the situation with no return. Also I was referring to developed countries so I would leave China out of this and I don't need to be reminded of the political situation over there. (Or in Singapore, which is not a democracy). Also, a fascist state means the merger of the public and private sector in what is called "corporativism". I am sure you see a lot of that going on. And again, the difference between Europe and USA is that it is the first time it happens in the USA and there is no (little?) understanding of how the process works and what the risks are. You rightly point out the risk facing Spain, Italy or Greece, but you also are aware of the immediate reaction of the press and of people in general to the various statements of politicians. People participation to the democracy process in Europe is higher that in the US (that is a fact, consider % of people voting at election). Protests and demonstrations are another way to partecipate to the process, it would be superficial to dismiss that. The only protest/reaction we see in the USA (and on this we are subject of media propaganda, so we may well miss something over here) is the Occupy Wall Street movement which is extremely limited in terms of what they are trying to achieve and also has (for what I can see/read) very little coordination, organisation etc. I agree that an economic boom is the best way to move ahead in terms of reducing political risk but the deficit and total debt/gdp situation in the USA will prevent that. The state needs more money every day and it is not prepared to shrink, this seems obvious to me and to any observer. The republican party would just cut spending in some sectors (maybe) but would not touch the major spending source, ie the defense/security sector . Also remember that China is the biggest foreign holder of US bonds. They didn't buy the bonds to clip the coupon, they did it for political reasons and to have another weapon to use in a possible (economical) confrontation.
Shorting Draghi (EURUSD) We have been looking for a spot to initiate a short position on the euro, on the conviction that forward moving events will result in a stronger US dollar than many might think, and the bearish post-Draghi conference reaction has given us an entry window. Read more: http://www.mercenarytrader.com/2012/09/shorting-draghi-eurusd/
Well, your statement "highest probability" infers a comparison to the political situation in other countries. Even if you leave China out, the potential for some version of a new authoritarian state (fascist, socialist etc) is much higher in Europe than in the US. Re, just needing an "event" what does that statement mean? We only need an event such as a meteor hitting earth for the human race to go extinct. Any hypothetical event can be theorized, the question is probabilities, odds and likelihood of various scenarios unfolding. I think you meant corporatism, and there are fair arguments that President Obama is a corporatist or at least in thrall to corporatists, but this is still a far cry from America being a fascist state. Think Mussolini, Franco, Pinochet etcetera. The fact that it has not yet happened in the USA does not mean the USA is at higher risk for it happening... if anything the reverse logic applies, given that it has already happened in Europe on multiple occasions the dynamics and attitudes are there for it to happen again. Political coups and institutional regime changes tend to happen in times of great upheaval and economic turmoil. Guess who is experiencing great upheaval and economic turmoil right now, to the point that capital and talent are fleeing from periphery countries to northern ones? Europe. Participation in the democratic process in a time of turmoil is part of the reason why Europe is at greater risk. As the situation goes into a downward spiral, with a toxic mix of austerity measures and lack of "all in" commitment from the more fiscally stable northern countreis, the odds of great-depression-like conditions in the southern countries become a virtual lock. And in such conditions, angry voters become putty in the hands of demagogues, who then move forward on the strength of what is at first a sanctioned democratic process, before concentrating power illegally or extra-democratically. Chavez in Venezuela for instance. Re, Occupy Wall Street, the laughable nature of America's protests and their utter lack of impact is further evidence of America's stability, not a tendency toward political dislocation and chaos. Again this is common sense: Where are you seeing rubber bullets, tear gas, and fire bombing in the streets? Spain and Greece, perhaps soon Italy. US protests thus far are basically bored college kids. Your logic does not follow at all here. If the world sees another technology oriented boom - biotech, clean energy, health care related or otherwise - then this boom will be funded by venture capital money and pension fund money. There is hundreds of billions to trillions in investment capital out there, much of it tasked with delivering 7 to 8% real returns in a zero interest rate low return world - what this means is that a knowledge driven boom will have no trouble getting all the funding it wants once the wheel starts turning. Not only would the state not interfere with such a boom once the flywheel starts turning, various states would actually be likely to help by providing incentives and credits to attract jobs and industry in the new boom areas to improve their tax base. No, China loaded up on US treasury bonds as a function of Beijing's most important mandate: Fostering conditions of full employment (or as close to full employment as possible) so as to absorb workers migrating from the fields to the cities while avoiding civil unrest. China's treasury bond accumulation came about via the practice of selling America "stuff" in huge volumes in the form of a vendor-finance relationship, then recycling the accumulated dollars back into bonds. China's UST holdings are a pretty weak "weapon," though, given that China would blow itself up in any serious attempt to use the weapon. China and the United States are so mutually interdependent in finance and trade terms, neither could truly unleash economic war on the other without doing drastic harm to itself. If Beijing were to threaten America economically, and America were to initiate severe trade sanctions in retaliation, China's export sector employment would collapse, leading to civil unrest outbreak and a collapse of the ruling party. It is possible that the US and China wind up in a devastating trade war, but if this does happen events would unfold in the manner of a nuclear war with no winners - it would not be a calculated first mover advantage for either side to initiate.
I'm 100% with you on the article today darkhorse. I made a similar post on Monday. Draghi hit a major home run for the Euro, at least as far as bonds are concerned. I admit I didn't think the buys would be 'unlimited'. That being what it is, Bernanke will ease off the throttle on QE3, probably implimenting a lighter than expected QE. I had a different thread where I called for the top in the S&P at 1427. So far it's encountering resistance around 1423.55, we'll see how it goes for the day. If it doesn't break 1427 today (the high for the year), it's not going to happen. Quote me on that. http://www.elitetrader.com/vb/showthread.php?s=&threadid=248641 Here's my thread. Still zero replies, nobody liked my call apparently, or didn't like it....who cares. http://www.google.com/url?sa=t&sour...roHwAQ&usg=AFQjCNF8ZSIaQOY15XbCGOJry1Ud35R18Q Probably the only good jobs report that will cause stock price decline that I'll ever see
Floating around 1427, equaling the high of the final spike before the collapse. More resistance...Fucking intense.
Re, just needing an "event" what does that statement mean? We only need an event such as a meteor hitting earth for the human race to go extinct. Any hypothetical event can be theorized, the question is probabilities, odds and likelihood of various scenarios unfolding. -------------------------------------------------------------------------------- First of all, sorry but I am not very good at quoting so i hope my reply is readable. When I refer to an event, it means an excuse (think 911). I am sure I don't need to explain how the elites manipulate the crowd now or in the past . My point is that the only way for the state to survive in its current size is to move ahead towards an authoritarian entity and so it will find an excuse to do so. The people have already been completely cut out from the decision making process and have no power (just ask yourself what is the conviction rate in the US, that is the best way to understand where the power lies). -------------------------------------------------------------------------------- I think you meant corporatism, and there are fair arguments that President Obama is a corporatist or at least in thrall to corporatists, but this is still a far cry from America being a fascist state. Think Mussolini, Franco, Pinochet etcetera. -------------------------------------------------------------------------------- yes corporatism, apologies. Again, I am saying that the USA is *moving towards* that, not that the metamorphosis is already completed. Mussolini invented the idea, but Pinochet created a police state without corporatism. Not all dictatorship have the same economical system. -------------------------------------------------------------------------------- Participation in the democratic process in a time of turmoil is part of the reason why Europe is at greater risk. -------------------------------------------------------------------------------- no, i am sorry that means that the society is still healthy and reacts, which is an extremely positive sign. -------------------------------------------------------------------------------- And in such conditions, angry voters become putty in the hands of demagogues, who then move forward on the strength of what is at first a sanctioned democratic process, before concentrating power illegally or extra-democratically. Chavez in Venezuela for instance. -------------------------------------------------------------------------------- that is not a given. Europe lived trough the same (worst?) economical turmoil in the '70s and did not move towards an authoritarian model even if politicians tried again and again. The reason in my opinion is that the people were raised by the generation that lived trough that so it was difficult for the elites to move into that direction no matter how hard they tried. -------------------------------------------------------------------------------- Re, Occupy Wall Street, the laughable nature of America's protests and their utter lack of impact is further evidence of America's stability, not a tendency toward political dislocation and chaos. -------------------------------------------------------------------------------- no, it is evidence of apathy and lack of participation in the democratic process. The Tea Party movement also disappeared, immediately captured by the political and economical elite. The inability of people to be heard by the elite is a sign of weakness and it will be exploited as such. -------------------------------------------------------------------------------- Again this is common sense: Where are you seeing rubber bullets, tear gas, and fire bombing in the streets? Spain and Greece, perhaps soon Italy. US protests thus far are basically bored college kids. -------------------------------------------------------------------------------- no, i am sorry. Taser guns, real guns, non lethal weapons of all kind, kettling etc etc have been used plenty of times in the USA. The freedom given to the police in the USA and their total lack of ability to deal with problematic situations without recurring to violence is also a clear sign that people have no power. The inability to react is not something to be proud of and the people in charge know very well that this weakness is there and will be exploited. When you have a group of protestors that know how to defend themselves it is more difficult to use the police to solve problems. For the simple reason that the policemen, as all human beings, are reluctant to risk their lives so will tend to avoid direct confrontation and over time will not obey orders that push them in that direction. -------------------------------------------------------------------------------- Your logic does not follow at all here. If the world sees another technology oriented boom - biotech, clean energy, health care related or otherwise - then this boom will be funded by venture capital money and pension fund money. -------------------------------------------------------------------------------- To have another boom you need investments. To have investments you need a reasonable faith that the government will not try to take your money away (look at Europe, as per your example). You can't have that certainty now in a country that has the level of deficit and total debt such as the USA. The only way in my opinion you can deliver that message is by reducing the size of the state, which will not happen because it would be suicidal for any politician that would try to do so. The parasite has now become bigger than the host and the only way to get rid of it is to kill the host. ------------------------------------------------------------------------------- China's UST holdings are a pretty weak "weapon," though, given that China would blow itself up in any serious attempt to use the weapon. China and the United States are so mutually interdependent in finance and trade terms, neither could truly unleash economic war on the other without doing drastic harm to itself. -------------------------------------------------------------------------------- I know how the chinese accumulated their dollars but they could have well reinvested them in other assets, why UST? surely in part because is the largest and most liquid market in the world, but also to put pressure on a potential/future enemy. Btw, I don't believe that China will be the new USA, they need to go trough some sort of test (large military confrontation and/or extreme economic crisis etc etc) and survive and this has not happen yet. With regards to the parallell between atomic weapons and UST, i was discussing the same thing today and I totally agree with you.