The US is still the richest and most powerful country in the world, and contrary to what some people say, there is no reason to panic. But we have to plan and think about this country's future. The European Union is getting stronger and more modern. The Euro is now the standard world currency, not the dollar. (The yen and yuan are important too, but the Euro does has the advantage of being used in over a dozen countries).
Asia is becoming a very serious competitor as well. Not to mention how the US owes a lot of money to China and Japan.
I have already read the previous posts and I know that strong economic growth can balance out a high national debt. I also know that it is not in China's best interests to dump its treasury bonds. But looking at history, every superpower has declined and fallen. The US will be no exception, most likely.
There is a lot that can happen to ruin the American economy. The oil squeeze, tougher competition from Asia and Europe, war with Iran, several major terrorist attacks, a lack of skilled workers due to baby boomer retirement, etc.
I repeat that I doubt anything major will happen soon. I think the US will be alright for the time being. But it would be foolish to laugh off these concerns and believe that the US will continue to thrive forever. There are some very serious challenges and we shouldn't underestimate them. What do you guys think? I am not trying to make any political point and I'm not looking for any partisan attacks or bashing. Whether you are right-wing, centrist, or left-wing, we all need to watch out for what might happen.
One more thing, would it be wise to create a savings account in Europe, and holding on to some Euros? It's a strong currency and is probably the least likely to fall completely in the event of a major global recession. (altho it would decline to an extent as well, of course)
user12345 said:"The Euro is now the standard world currency, not the dollar. "
Since when ?
red for cluelessness !
It's debatable, that's true. What I mean is that the US dollar used to be the most influential and widely used currency. But now, many Asian countries, as well as many of the OPEC countries, prefer to work with Euros rather than dollars. The Euro is much stronger than the dollar and it can be used in over a dozen countries. The dollar, on the other hand, is falling out of favor.
Either way, what I'm saying is that although we have no reason to panic and will probably see a strong US economy for the next decade, we must start planning for what comes next, because the serious challenges are many. Oil is getting more and more expensive, and could very well go past $100 per barrel as demand exceeds supply.
The chaos in Iraq and a possible conflict in Iran don't really help our economy much either. Not to mention increased competition and other challenges.
Is it not wise to play it safe and try to protect yourself from a possible US collapse? Buying Euros is one solution but there are other things too. Any suggestions or feedback?
czarandy said:I would just split investments 50/50 between US/international.
If the dollar falls your international investments will protect you and if not they should still give good returns.
Good answer, green for you! By all means, I will continue investing in US stocks and funds. I don't think anything bad will happen in the near future. All I was saying was putting away part of your investments in international markets or savings accounts, as a backup. Maybe 80 percent US and 20 percent international. (altho currently it would be wise to invest much more internationally instead of domestically, being that international markets are growing much faster than the US right now)
Fifty years is a long time for assessment. Mostly likely there will 3-4 bear markets in the US, and hopefully double the number (or triple the duration) of bull markets.
Despite our federal defecit and current account defecit issues, America still has, by far, the greatest pool of financial ingenuity in the world. We've always paid our debts. No matter how bad the economic collapse that would occur, the nation can find a way to restructure debt and obligations and get put on the right track in 3-4 years. With the exception of FDR's 8 year Great Depression, that's how it has worked time and time again. But it only works if Wall Street is given freedom to do its magic.
The greatest threat to any recovery is the super-welfare state or wacky ideas that Chairman Mao proposed in the name of self-sufficiency. By the way, is anyone going on Chairman John Edward's poverty bus?
If prosperity and progress for the United States would subside, then would it migrate elsewhere? Would another region of the world benefit at the loss of the US?
Besides the other nations in the developed, stable economies (G8, OECD, etc.), the rest of the world does not present much of an alternative to the current dominant economies. Some other states on the near periphery of the developed economies (China, Mexico, Eastern Europe, etc.) might also become "developed", but much of the world, in Latin America, Africa, and Asia, should require many more years of development, politically and economically.
TheThinker said:user12345 said:"The Euro is now the standard world currency, not the dollar. "
Since when ?
red for cluelessness !
It's debatable, that's true. What I mean is that the US dollar used to be the most influential and widely used currency. But now, many Asian countries, as well as many of the OPEC countries, prefer to work with Euros rather than dollars. The Euro is much stronger than the dollar and it can be used in over a dozen countries. The dollar, on the other hand, is falling out of favor.
LOL 70% of OPEC money is held in British pounds. So not sure where you are getting your information from. China is only major centeral bank which huge reserves that has stated they are diversifying there dollar holding into Euro as Japan is still holding US Dollars which is only other country with huge reserves and surpluses. China is only doing so becaue of the weakness of the US Dollar. Back in the mid to late 70's and early 80's same thing happened and everyone was claiming the dollar was no longer to going "World Reserve Currency" and comidities would no longer be traded in dollars by 1986-87 that talk was non existant. Many countries around world moved reserves from US Dollars into Swiss Francs and Britsh Pounds back in mid to lates 70's and early 80's when the dollar was weak as hedge to protect there reserves. Once the dollar start to recover you will see all these central banks move back to US Dollar again as a hedge as well.
You cant personally blame contries for trying to protect the value of there reserves.
chrisatspfld said:If prosperity and progress for the United States would subside, then would it migrate elsewhere? Would another region of the world benefit at the loss of the US? Besides the other nations in the developed, stable economies (G8, OECD, etc.), the rest of the world does not present much of an alternative to the current dominant economies. Some other states on the near periphery of the developed economies (China, Mexico, Eastern Europe, etc.) might also become "developed", but much of the world, in Latin America, Africa, and Asia, should require many more years of development, politically and economically.
You should not confuse the concepts of "developed nation" with a "dominant economy." China will take more than one Olympic games to become truly developed, yet a hick up in it's economy will be noticed just as much as a hick up in US economy. And it's influence will continue to increase, not always real, sometimes perceived, nevertheless it is still possible to be "dominant" yet not fully "developed."
As far as who can pick up the slack, there is no need for it to be one country. Despite all the the trouble, EU's inclusion of Eastern European countries means they have much more room for growth. While Western Europe obviously tapped out it's capabilities of super fast growth, Easter bloc has not truly even started.
evlemonkfish said:Fifty years is a long time for assessment. Mostly likely there will 3-4 bear markets in the US, and hopefully double the number (or triple the duration) of bull markets.
I said 50 years, but economic collapse could happen much sooner, perhaps in 15 or 20 years. Either way, this isn't about bear markets and bull markets. I'm talking about a very serious downfall that would cause much hardship, lasting for several years. Something as bad as the Great Depression of the 30's.
It's true that the US benefits from tremendous resources and a lot of clout. But as history shows, all superpowers will fall. As strong as we are economically and militarily, there is a lot that can happen to seriously dent our power. We depend on oil for energy and well as for making plastic materials. But it's obvious that as global demand rises, it will exceed the supply. China and India have a rising middle class that will buy more oil for their cars and lifestyles. Those 2 nations have over a billion residents each!
There are other reasons to worry, as I mentioned before. War with Iran, major terrorist attacks, increased competition, etc. We should never overestimate our abilities. We are a strong nation but by no means are we immune to serious economic catastrophe. As China and the EU become wealthier and more advanced, we will have to share the profits and the influence. We will no longer be the only superpower, but rather one out of 3. That's a fair thing, they have a right to be powerful too. But naturally our wealth and clout will go down as others rise and share our place at the top.
I said 50 years, but economic collapse could happen much sooner, perhaps in 15 or 20 years. Either way, this isn't about bear markets and bull markets. I'm talking about a very serious downfall that would cause much hardship, lasting for several years. Something as bad as the Great Depression of the 30's.
Something worse than the 1930's is coming this way pretty darn soon. Anyone with a shred of common sense can see that. However, you're not going to find too many FW members who see the signs. Too many Kool Aid drinkers around here, with delusions of getting rich with AOR's and $100 offers to open checking accounts.
The Fed made a decision to try to print us out of the corner we're in, mostly because that was their only option. It won't work, and is only making matters worse.
America will be fine in the long run, but we need to go through some serious pain the the short term, to equalize the credit-fueled stupidity of recent times.
Something worse than the 1930's is coming this way pretty darn soon. Anyone with a shred of common sense can see that. However, you're not going to find too many FW members who see the signs. Too many Kool Aid drinkers around here, with delusions of getting rich with AOR's and $100 offers to open checking accounts.
The Fed made a decision to try to print us out of the corner we're in, mostly because that was their only option. It won't work, and is only making matters worse.
America will be fine in the long run, but we need to go through some serious pain the the short term, to equalize the credit-fueled stupidity of recent times.
Green for you. I'm not an alarmist and don't see any reason to panic but I definitely see trouble ahead, and it won't be pretty. Although Greenspan was a smart Fed chairman and had to do what it took to keep things under control, I think a lot of the credit decisions could bite is hard in the coming years.
But regardless of whether you love Greenspan or not, we need to be realistic and be cautious about the hardships we may very well have to face.
ifyouhavetoask said:America will be fine in the long run, but we need to go through some serious pain the the short term, to equalize the credit-fueled stupidity of recent times.So how do you propose to mitigate that pain, other than keeping a diversified portfolio, which you should be doing anyway?
ifyouhavetoask said:Something worse than the 1930's is coming this way pretty darn soon. Anyone with a shred of common sense can see that.
I will go ahead and guess that you weren't around for 1930's, because the times were pretty darn bad and that doesn't mesh with your assertions that it's a short term "bad" times. Your "1930's" started in 1927 at the latest and did not end until WW2 came along, that's not very short term.
And please leave AOR out of this, it has ABSOLUTELY nothing to do with the topic or how people perceive current economic situation. As opposed to what you'd like to believe, you get most of your red for being off-topic (and unnecessarily combative), not for the actual opinion on the subject.
TheThinker said: ........... But looking at history, every superpower has declined and fallen...................
if you remember, Gorbachov had large birth mark on his forehead. Some traced it and saw 666, the "mark of the beast" and concluded that he was the antichrist and that the Soviet Union was going to cause the destruction of the world
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