We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
Western Chauvinist ·
Sep 3, 2011 at 10:34am
Here's a nifty five minute video explaining why the global economy will collapse.
H/T: Hodar Report who also explains, "A better way to describe borrowing money from other countries is that we buy things from them with dollars, and then they turn around and use those dollars to buy our bonds. The net exchange is that other countries are making things for us in return for I.O.U.s."
And filling in for Mark Steyn today on the subject of our doomtastic future... VDH: Zero Jobs 101 -- The Psychology of Alienating Employers
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Dec '10
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
In my estimation the best way to get out of the problem is to reduce spending. Sure some people will complain when the teat goes dry, but then they'll be forced to actually do something to provide for their own existence. People doing things to provide for their own existence is how economies grow.
Dec '10
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
Right. I agree with you, but I think we have to acknowledge there will be some period of economic pain. The question is, how long and how painful will it be?
Just kicking this around at the dinner table last night with some conservative friends, we figure the dollar might have to be re-issued to re-set pricing and value at some point, like was done for the Bolivian(?) currency to recover from runaway inflation.
I think the duration and extent of suffering in the correction period depends on how much more debt is accumulated and how much more downward pressure is applied to the private sector -- that is, it will be shorter and shallower if we terminate Obamanomics in 2012. The sooner the better.
Edited on Sep 3, 2011 at 8:08amDec '10
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
There's the other catch 22. Do we want short intense pain or long dull pain? I get headaches of each kind and can't really say I prefer one to the other. Perhaps a little intensity up front that declines over a reasonable amount of time (like we had with Reagan) will be the best answer. Maybe we should look at what his economic team did, tweak it a little to fit the times (like the 0 Fed interest rate debacle) and implement it. The key, however, is still to quit spending so much money.
Jan '11
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
While I agree that some pain is in order, I firmly feel that it has to come from spending cuts and benefit/entitlement restructuring. Broad-based (flat) low tax rate systems have been proven over & over again to increase/keep revenues adequate. The 'rich' are not and never were part of the problem that got us into this mess. We shouldn't agree to tax rate increases and allow the liberals to 'lock in' the dramatic increases in spending we've seen.
The distant rumblings we've felt to the system seem to be coming to head - one can feel something shifting in the discussion threads here and elsewhere. Typical compromise between the camps consisted of growing gov't at a slower rate - I think that's all finished now. It's gonna be a roll-back of the state or a much, much more authortarian one if they win.
Sep '10
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
The video lays out a scenario that is far more serious than the one faced by Reagan and in my view is probably understating the problem by at least a factor of 3. Most of the outstanding debt is denominated in dollars. This fact makes it unclear if inflation or deflation lies in our immediate future. The Feds attempt to reflate resulted in a modest uptick in the stock market, but it appears most of the money went into commodities and Treasuries which do not produce much economic activity. The economic condition we find ourselves in comes after 2+ years of zero interest rates and two rounds of unprecedented Quantitative Easing. The rosier scenario of inflating our way out of the debt might well be beyond the reach of the Fed. That leaves deflation which will be far more painful than most are anticipating.
Dec '10
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
Kowaliczko Tom: While I agree that some pain is in order, I firmly feel that it has to come from spending cuts and benefit/entitlement restructuring. Broad-based (flat) low tax rate systems have been proven over & over again to increase/keep revenues adequate. ...
The distant rumblings we've felt to the system seem to be coming to head - one can feel something shifting in the discussion threads here and elsewhere. Typical compromise between the camps consisted of growing gov't at a slower rate - I think that's all finished now. It's gonna be a roll-back of the state or a much, much more authortarian one if they win. · Sep 3 at 9:18am
I agree with you and KP about spending cuts being the only true solution, but I think it was wise of the video-maker to present the down-side of both spending cuts and tax hikes. I'm not so sure about his "riots in the streets" consequence of tax hikes. I think TEA Parties are more likely and they don't look anything like leftist mobs.
And, yes, we better pray for a roll-back of the state.
Dec '10
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
Global economic collapse is only a third of the problem? Yikes!
Or are you referring to the wars which might ensue when we blow off paying back China and others?
Inflation, deflation, stagflation... decisions, decisions...
Jun '10
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
Even in chaos, the World has become a much smaller place. Is it possible that the US will just lose its most productive and brightest citizens to parts of the World that are not saddled with so much debt? If the Obama solution is to find persons and corporations that still have some wealth, and bleed them dry, why won't they just flee from the US, like Californians are fleeing to Texas, or Detroiters fled to beyond city limits? In the information age you can operate from almost anywhere, and in many places you can keep doing it in English--the World's second language..
Apr '11
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
"While the US was panicking over a double zero jobs report, things in Europe just fell off a cliff. As both the WSJ and Reuters report, it seems that the second Greek bailout, following repeated and consistent disappointments by Greece which has resolutely refused to comply with the terms of its fiscal austerity program, has just collapsed.And with the US closed on Monday: long a counterbalance to European risk pessimism, this week (especially with the news fro the latest FHFA onslaught against global banks) may just be the one that "it" all comes to a head. But back to Europe, and more specifically Greece, which it now appears is doomed. "I expect a hard default definitely before March, maybe this year, and it could come with this program review," said a senior IMF economist"
http://www.zerohedge.com/news/game-over-senior-imf-official-i-expect-hard-greek-default-year
Oct '10
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
The world is super-saturated with debt which cannot be repaid, and on the verge of a phase transition which will bring the credit which funds productive enterprise to a halt for an indeterminate period. Without radical changes to “entitlement” programs, obligations coming due will overwhelm any foreseeable revenues available from raising taxes or “growing out of it” which, of course, tax increases will make less probable.
I think where we're heading is either toward a complete collapse and the end of the entire Enlightenment project (which is the way I'd bet), or toward a blast of the shofar and a global jubilee in which all of these farcically unrepayable debts are written down and/or liquidated against one another, with a grand restart of the economic system based on something sound.
Such a cataclysmic change is not at all unprecedented. It happened in the aftermath of World War I, and again after World War II with the adoption of the Bretton Woods system as described in Liaquat Ahamed's Lords of Finance. It needn't even require an international consensus to achieve. Revaluing the dollar to US$7000/ounce of gold convertible would do it overnight.
Sep '10
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
Western Chauvinist
Global economic collapse is only a third of the problem? Yikes!
Or are you referring to the wars which might ensue when we blow off paying back China and others?
Inflation, deflation, stagflation... decisions, decisions... · Sep 3 at 12:30pm
I’m referring to the total amount of debt and what I believe to be the naïve belief that the Fed can inflate it away. There is an outside chance the central bankers can pull it off, but the odds are not in their favor. Hype- inflation is the rosier scenario, deflation will be far worse.
Jul '10
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
Show of hands:
How many of Y'all have successfully spent Yerself out of debt without generating more income?
Jul '10
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
Also, fearing a bunch of sponges rioting in the streets isn't a viable excuse to keep on paying them.
Feb '11
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
(part 1 of 2)
I’m no economist, but IMHO there are a lot of problems with this video.
First of all, the exchange rates have nothing to do with why labor is cheaper elsewhere and why companies export jobs. Labor (like any resource) will be utilized most where it’s cheapest and labor here is artificially expensive because of myriad labor laws, minimum wage, OSHA, etc. Second, the video implies that companies outsourcing jobs creates unemployment here. That’s false and has been disproven myriad times. The free movement of capital and labor makes both sides richer and creates jobs here by having American customers have more money to spend. (If even on Ricochet we aren’t sure about that then all that’s left to do is weep and gnash teeth.) Finally, while we’ve gone through two rounds of printing lots of money (quantitative easing) it has not (at least yet) resulted in significant inflation. So the video’s concern about the currency being devalued (though I’m concerned too) hasn’t come to pass.
Edited on Sep 3, 2011 at 5:50pmFeb '11
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
(part 2 of 2)
But the video’s underlying assumption is that gov’t spending fuels the economy – pure Keynesianism. If the gov’t stopped spending tomorrow on the redistributive programs (Medicare, SocSec) there would be tremendous hardship for those who didn’t have a chance to make other arrangements (so I’m not proposing that) but the economy would be just fine because the private sector would grow.
A last point, the collapse in the video is not a global economic collapse, just a financial collapse. Credit would grind to a halt. If you aren’t over-extended and aren’t lending anyone money, you would be OK. The fundamentals of economic growth have to do with the value we create, not with the currency or the government. I evaluate your sore throat; you give me two kitchen chairs. That’s economic growth.
Sorry for the very long comment.
Edited on Sep 3, 2011 at 5:49pmDec '10
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
Doctor Bean:
I’m no economist, but IMHO there are a lot of problems with this video.
First of all, the exchange rates have nothing to do with why labor is cheaper elsewhere and why companies export jobs. ...
Second, the video implies that companies outsourcing jobs creates unemployment here. ...
Finally, while we’ve gone through two rounds of printing lots of money (quantitative easing) it has not (at least yet) resulted in significant inflation. So the video’s concern about the currency being devalued (though I’m concerned too) hasn’t come to pass. ...
On your first point I agree.
On your second point, I don't think that's what the narrator says. He says people with jobs are more concerned with keeping them and therefore work harder for the same money. Is that not true for you or the people you know?
Third, I'm the shopper for my family. Prices are way up, but this is largely disguised by shrinking the package size and keeping the price the same. Corn syrup and canned tuna are dramatic examples. I buy half as much Mrs. Butterworth's for the same price as last year. ...
Dec '10
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
The question we should be asking about inflation is, "Why isn't it worse?" I think the answer is demand is way down.
Doctor Bean: (part 2 of 2)
But the video’s underlying assumption is that gov’t spending fuels the economy – pure Keynesianism. If the gov’t stopped spending tomorrow on the redistributive programs (Medicare, SocSec) there would be tremendous hardship for those who didn’t have a chance to make other arrangements (so I’m not proposing that) but the economy would be just fine because the private sector would grow.
A last point, the collapse in the video is not a global economic collapse, just a financial collapse. Credit would grind to a halt. If you aren’t over-extended and aren’t lending anyone money, you would be OK. The fundamentals of economic growth have to do with the value we create, not with the currency or the government. I evaluate your sore throat; you give me two kitchen chairs. That’s economic growth.
I don't think the narrator is addressing what fuels the economy. He's talking about the Ponzi-like factors we've instituted which lead inevitably to collapse.
Feb '11
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
Western Chauvenist: Fair enough. I definitely know lots of people working harder for less or for the same wages.
I certainly agree with the larger point, that we're doomed. I think the productive part of society is carrying a larger and larger burden and that will have to mean a lower standard of living for all of us unless drastic changes are made.
Dec '10
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
Doctor Bean,
When the narrator talks about the hazards of reducing government spending, he doesn't say it would actually hurt the economy, as the Keynesians argue. He says the people receiving federal funds would complain because they have less money to spend and people would therefore claim this was hurting the economy. He's right about that because the argument is already in use. Agriculture Secretary Vilsack claims that every $1 of food stamps generates $1.84 in return. Gotta love those Keynesian multipliers!
Call it economic collapse or financial collapse, it's going to hurt everyone who is not already extremely wealthy. A deflationary spiral is particularly damaging to just the kind of responsible middle class workers, savers, and investors who make the world go 'round. liberal jim is right about deflation being the worst possible 'flation' we could experience.
Edited on Sep 3, 2011 at 9:07pmFeb '11
Re: We're Doomed. Have a Nice Zero Jobs Labor Day Weekend!
Western: OK. I listened to it too defensively. I see a Keynesian behind every bush nowadays. I probably just need a nap.