If the Japanese just got downgraded running 200% debt to GDP how can U.S. lose its rating at 60% GDP?
Still, US has the biggest military budget (with whatever it brings to the table). Can play game with that if things get really bad. After that - game over.
Also, I was following elliottwave.com I missed out on this ferious bear market rally....March 6 they were saying there will be a deeper plunge. I unsubscribed. I do respect Pretcher especially in the area of socionomics and feel he has the general picture right, but he tends to overdramatize the negative.
The Soviet Union broke up, yet they did not hold the world hostage with their nuclear technology. Russia still has the largest amount of nukes in the world. Politicians in Washington have family located in different parts of the world, they understand Mutual Assured Destruction. Going after a relatively defenceless country like Iraq and even Iran is not that big of a deal, but Russia and China are in a completely different arena.
We havent been at 60% since 2003. We were at 70% in 2008 and we are at 90% this year. Last time we jumped like that was in the mid 1940s...Back when we were manufacturing EVERYTHING so it was easy to pay our way out of that debt. We manufacture NOTHING now and the companies that do manufacture things like computers, do so in 3rd world countries where they can pay labor 300 dollars per month instead of 300 dollars per day in the US. We have no base for paying off that debt. Japan at least works their tails off in manufacturing.
No, but i seem to remember the russians selling off some of their high tech migs after the collapse. I remember seeing them try to sell them for as low at 10,000 dollars each. Try to imagine if the US started trying to sell their stealth bombers for $10k. (i'd buy one!)
90% of the kids that join the military do so because they dont see any future in their home towns or cant get jobs anywhere. You cut their paycheck and see how fast our military goes into shambles. Very few enlisted soldiers are going to put up with shit if they aint getting paid for it. Of course, im sure the higher ranking soldiers will start shooting people that try to quit the military which might get some to stay and work for free, but eventually that will start an uprising in thier own ranks.
I don't think US will be downgraded though there have been many rumors about it recently. USD is the major reserve currency in the world. If US is downgraded, it will probably cause turmoil in the world market: USD selloffs, stocks tumble.... However, beward of USD's movement as investors are very sentiment to these news recently!
People need to start looking at these numbers in absolute terms. Sure, a third world country may have deficit to GDP of 100% while the US deficit to GDP is around 12 to 18%. But in absolute terms, the US number is trillions higher. That is a lot of money to ask foreign borrowers for while they are still struggling with their own crises. Hypothetically, what would happen to America if foreign investors went just 6 months, until January 2010, selling as many US bonds as they bought? There would be no net debt inflow for the US gov't from foreign sources in this scenario.