Den 02-01-2013 02:44, flipper skrev:
On Tue, 01 Jan 2013 17:31:39 +0100, Frithiof Andreas Jensen
wrote:

Den 28-12-2012 23:43, Jim Thompson skrev:
US Budget for Dummies.... (from http://tinyurl.com/cv3wlwx )

No matter - The USA is going to default on the debt anyway, which means
that the rational policy is to run up as much debt as possible and use
it to aquire assets and influence before the inevitable default!

You must think people are complete morons. Tell me, if you're "going
to default... anyway" then why in the world would I loan you money?

"People" a.k.a. countries actually, have little choice: The US Dollar is
what Buyeth The Oil! People, who trade Oil outside of the reserve
currency, gets some "trade embargo", "arab spring" and "humanitarian
intervention" coming to their way soon enough.

*Everybody*, with the possible exception of Europe, knows exactly what
the gig is: But life & trade has to go on nevertheless! "The world as it
is" and all that.

But there are portents.

Russian wheat and Chinese rare earths are becoming hard to buy with USD.
These trade restrictions are coming as a consequence of "people" knowing
that "the US will default somehow, so maybe we don't want to exchange
all our good stuff for not-so-good money". The US have trade
restrictions the "other way" too. "People" holding trillions of USD
cannot freely buy companies inside the US - the decent ones are always
"of strategic importance". The US has erected a barrier against the
flood of money it creates.


Practice what you preach. Loan me a million. I guarantee I won't pay
it back but I want it, so 'loan' it to me. Wait, make that a billion.
You might as well 'loan' me a lot since it's never coming back.

States are different to people - If you owe me, I can eventually send
the boys round to sort the matter out. With a strong state, there is
nothing the investors can really do except reach a settlement. With a
weak and corrupt state the creditors may even use the government to
extract as much value as possible until "the revolution"(tm) happens.
This is indeed how it goes, there is a lot of propaganda on the subject
because it would be pretty bad for "investor confidence" if enough
people to matter at elections found out how easy it is for a nation
state to default compared to an individual situation. BASEL II even
assumes that government debt is as good as cash - which means that
banks, like f.ex. Deutsche Bank, can legally pledge Greek bonds as
reserve capital and leverage them 50 times!

f.ex.
Turkey went bust in the 'noughties - 2001 - I think. One great thing for
the Turks was that they had just bought new telecom networks from
Ericsson and Motorola. Nobody came and repo'ed that while Ericsson had
to sack 30% of the workforce (Motorola was bailed by the US government).

Now Greece and Ireland are being sucked dry, being what economists call
"responsible", while Iceland (irresponsible, default) is recovering fast.

Defaults happen all the time - about 200 times from 1900 to 2000.

If you want to live in a bankrupt third world economy then why don't
you move to one of them?

Like Detroit? Nah, it's wasted effort - the third world is moving here
already and their economy is following ;-)