In response to an essay on – Is a Dollar collapse likely? These are some readers questions
“US debt is high, but so is European debt”.
Could you perhaps elaborate on that or point me to articles that discuss European debt?
National debt in EU countries is a real problem. Countries like Italy already have a national debt of over 100% of GDP, but, demographics mean that the ratio of retired people to workers is increasing making future debt likely to grow. Good article here in Times – EU debt
also: UK National Debt
Is it certain that European countries will slip into a recession (by classical definition, and if so, who will and how deeply)?
I’m sure EU countries will slip into technical recession. How long will the EU recession last?
Depends on:
- Extent of financial crisis spreading to EU banks
- Depends how much EU house prices fall
- Depends how much global economy slows down
- The response of the ECB and whether lower rates would actually boost spending amongst EU consumers
- Will the Euro continue its appreciation making it more difficult for EU exporters.
Gold looks like such a good investment at the moment.” How can you advise one to invest in Gold, and how can a person like myself start?
I think Gold is a good investment (though be wary of a speculative bubble in Gold). You could just buy shares in gold companies. Or I presume you could buy Gold stocks direcly. But, being an economist I have no money to invest, so actually, I don’t really know.
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Thanks again 🙂
That was very informative.
Do you still stand by the above analysis about a year ago?
I would like to appreciate for your tremendous approach. It seems that there is someone, who can predict the future. however, i am reading it one year later but it is very useful for “Take a View”.
US DOLLAR Collapse??
One should not just look at Government Debts to find out the overall condition of the USA Economy/Dollar. So the Debt to GDP is about 100% and Climbing with an expected 2011 debt to GDP increase of 10.8% not included in this figure is state and local debts which are also sizable which would add a couple more percentage points of overall debt to GDP so in 2011 one could say Federal, State and Local Debts for the Year will increase around 13% of GDP! Also America is Projected to have large Government Debts well into the Future while Growth and jobs will be sub par and in all actuality America has had an increase in net jobs since the late 1990’s!
Then One most go to Entitlements as it stands now America will have a 100 Trillion dollar shortfall(Social Security, Medicare, Government Pensions ,etc over the next 40 years or so) S.S. can be fixed fairly easy, the Medical And Government Pensions are another story!!
Then One should add private sector debts…Trade Debts, Consumer debts, Corporate debts, etc which total 60 trillion and climbing!
With Huge Current Account Deficits America is selling itself out on K-Street with foreign Creditor nations such as Germany, Japan, China, etc ,etc..owning land, factories, corporations, etc ,etc with profits and control going back to the Creditors(owners) a modern version of Colonies controlled by Empires or actually the same version this is how it was accomplished back before the 20th century or before the Cold War with the Soviets and so forth we have gone backward!!!
What of personnel savings? Americans save nearly nothing and the stock market is dominated by the top 10% of the population along with almost all assets where the bottom 70% having now positive network only huge debts!!
The National Infrastructure is falling apart and needs Trillions.
Education Rankings are sub par and so 70% of the American Adult Population cannot measure up in a Globalized Economy.
Also America is spending over 1 trillion yearly on it’s military/security/spy apparatus. Basic research is dropping and now behind other countries with 60% of research money going to Military Weapons Research which is very Corrupt and of course because of this not efficient with many billions going into Criminals pockets.
No Plan to go towards a Renewable or Sustainable Economy with Severe Environmental Problems and energy shortages leave on to believe…YES The US could Collapse when macro-Picture is examined and not just Government debts.
Spain for example has very high personnel Savings of 20 % with it’s underground economy and also still a fairly low overall debt to gdp figure…They have problems but overall less problems then the Americans..Spain’s Infrastructure is top notch, affordable Colleges and Vocational Schools and a push towards renewable energy/sustainable society lead tone to believe they are working on the problem also with the reduction of govt debt down to 3% by 2013 should improve the situation. This year they will have around a 5.5% Debt Ratio maybe 6% with the Ratio Trending downward.
One should look at the whole picture not just what the media focuses on.
One last point the Eurozone does not have a centralized Treasury like in the USA and this is what is causing much of the problems because there is no mechanism to transfer money from Rich States to weaker states or areas like they do in America!!
Hundreds of billions yearly are transferred from places like California, Illinois, New York, etc to Mississippi, North Carolina, etc ,etc. About 20 states(creditors) give 30 states(Debtors) money for roads, Schools, etc, etc every year!!
If California was not burdened with this then they cold actually maybe balance their budget and so forth???
Most of the red States receive money from the blue states so the Red States are the biggest welfare who..s
that exist. This is how they kept the union together after the civil war..they bought them!!!!!!