[deMolay]

Good read. http://www.prudentbear.com/index.php/th ... t_id=10307

[cipi604]

UK

[vtsnowedin]

Nope ! it will be the USA. We have no competent adult in charge.

[patience]

Latvia, Ukraine, Ireland, are all on the edge. If a couple of those go down, UK and Germany could have some real trouble. But my bet is on the UK first, and US next. Could be the other way round. Okay, I've stuck my neck out, now to read that article.....

[evilgenius]

Define big because there will be countries going down as mentioned, Latvia, Estonia. If you want to bring up Spain or the like you really need to start considering the viability of the EU project, which is working pretty well right now, unless you are a blowhard right winger.

The UK has hitched its star to the US which makes it vulnerable. The pound does not enjoy world reserve currency status, so that makes the threat double. The confusion over the threat level which the UK is toying with is made higher by the fact that Gordon Brown is a hanger on rather than a true British fighter. Not even his own people really believe in him. Cameron isn't much better. If the UK could find somebody truly competent things would probably change for the better (in terms of default danger) quickly.

The Arab world has a few contenders for 'I was attacked by a chimp and will never be the same' status. Dubai is full of cars at the airport with notes from Westerners saying how sorry they were for leaving and not being able to pay their debts.

Ghawar is about a year or two away (maybe, how many times has this been feared?) from falling off so much in production that the Saudis will have to toy with bankruptcy or revolution.

Russia has absolutely failed to invest in any other industry than energy, and that corruptly.

You name em. they are waiting to go.....

[hardtootell-2]

I think Mexico could be an unpleasant surprise...

[timmac]

This is exactly why I beleave the good citizens of America need to Vote Out our current government and declare Federal Bankruptcy while we are still some what afloat, waiting till we are dead is to late, however this will fall on deaf ears and we will just slowly sink in debt, how in the hell are we going to support the new health care bill is beyond me..



Edited so I don't offend certain people like Dr O..

[mattduke]

Debtor nations that owe their own fiat currency don't default. They hyperinflate.

[timmac]

I think Mexico could be an unpleasant surprise...

We need to do somthing fast with a wall on our southern boarder, when Mexico does collapse and they will very soon, there will be 3 times the amount of illegals coming over.

I am starting to really beleave that SHTF in America much sooner than I have always believed, and I am a moderate doomer.

2011 is my prediction America will be in a world of $hit.

[RonMN]

Just change the words "over throw" to "abolish" and the statement is perfectly constitutional.

[deMolay]

Don't neglect Japan Inc.

[dorlomin]

Britain came very close to default during the 1976 crisis which eventualy led to an IMF bailout. It has the advantage that its currency is weakening meaning that the cost of imports is rising which should help slow down the trade deficit and make the country more able to produce locally. To be honest it could run another 5 years at current levels of borrowing before it became unsustainable.

The most likely outcome will be severe cuts in public spending late next year from Thatcherite minister of finance Osborne. This plus have a large group of assets on its books from the banks will allow a stabilisation of the rise in debts.

Actualy I think the major economies would all head towards default together as the exporters are so reliant on US and UK consumers for sales that as cuts in expenditure hit the anglophonic world, this will cause retrenchments in the Eurozone, China and Japan. Underthose circumstances Japan would be the first to default but the roiling of the markets that would cause would pretty much kill of the UK economy.

The global economy will continue its phantom recovery for a while next year before the ending of stimulus packages sends us into the next down turn....

From there its about how creative the governments can get staving off a default.

[rangerone314]

Debtor nations that owe their own fiat currency don't default. They hyperinflate.

+1

US will print like crazy. US didn't default during the Civil War just print greenbacks.

[Tyler_JC]

Japan is in much rougher shape than most people realize.

Savings are falling:


The workforce is rapidly aging:


Debt is exploding:


Interest rates in Japan might be low now, but does anyone think that is going to continue given the problems that country is facing?

I'm more worried about Japan than the US in the intermediate term. The US can adjust its policies to fix the deficit after the real debt crisis hits. It might be painful and political unpopular but it wouldn't be completely without precedent.

For Japan, default is kind of already set in stone. It's just a question of when. 2015? 2020?

[dorlomin]

Mentally most people are still fighting the great depression when they look for solutions to this one. The difference is that then the US was a net exporter now it is massively a net importer. Most people tend to think that protectionism will lead to a worse depression than currently experianced, but one of the key causes of the current malaise is the slow leak of good paying jobs from the west to the developing world, these jobs provided markets for the manufactured goods. We now have a deflationary crisis for among other reasons the over capacity as new workers cannot afford to purchase as much as the workers whos jobs they have taken.

One brutal but effective way out of this crisis is to increase the income of US workers and increase the number of US workers by restricting imports. Reopen the textil factories and chemical works that have closed over the past twenty years.

It is not a panacea for all the problems but the US has the ability to rewind many of the changes that have brought us here. This will not suddenly make houses worth there 2006 values, nor replace the lost value in the banks, but it could put a floor over a total global melt down.

But everyone is too busy fighting the last war\ depression.

[highlander]

has the advantage that its currency is weakening meaning that the cost of imports is rising which should help slow down the trade deficit and make the country more able to produce locally.

I guess I missed something here. I thought rising costs of imports raised trade deficits.

A country is only able to produce locally when
it wants to, or
it has to

As long as printing presses keep going, we in the west can trade our toilet paper dollars for cheap chinese junk.

Protectionism (tariffs, etc) are considered a leading cause of the lask world war. (country A needs stuff, country b has it, but won't sell it to them at reasonable rates) When the stuff is oil (Germany,Japan) bad things happen. Hence, the Carter Doctrine and our meddling in the middle east. Katie Bar the Door if OPEC tries another embargo.

I think China has already signalled their "default" A trillion in debt vs 10 trillion in derivitives. They have a bit of leverage over western debtor nations.

[dorlomin]

has the advantage that its currency is weakening meaning that the cost of imports is rising which should help slow down the trade deficit and make the country more able to produce locally.

I guess I missed something here. I thought rising costs of imports raised trade deficits.

It makes domesticaly produced goods more competative against imports, favouring people to buy locally and for investors to invest in local manufacturing. Hence why so many countries are so keen to keep their currencies undervalued.

[dorlomin]

Protectionism (tariffs, etc) are considered a leading cause of the lask world war. (country A needs stuff, country b has it, but won't sell it to them at reasonable rates) When the stuff is oil (Germany,Japan) bad things happen.

Not really, in terms of Germany the factors that contributed were vritualy nothing to do with protectionism. It was all about the treatment it receaced after WWI. German expansionism was fuelled by a desire for land not trade.

In Japans case , the oil embargo was a US response to its war of aggression in China. There was no mercentalism or protectionism involved.

[Falconoffury]

I don't see how any country could go into default unless it decides to. One can easily argue that the USA has been in technical default for years. Couldn't any country perform the same financial wizardry on their own currency? Granted, it may work out poorly for them due to inflation, but they would be able to continue paying their obligations.

[dorlomin]

I don't see how any country could go into default unless it decides to. One can easily argue that the USA has been in technical default for years. Couldn't any country perform the same financial wizardry on their own currency? Granted, it may work out poorly for them due to inflation, but they would be able to continue paying their obligations.

Not if you had to buy your debt in dollars you cant.