Apple affected by USA financial collapse?

[Virgil-TB2]

I am in Canada and I was talking to my financial advisor the other day (who works for one of the larger banking institutions up here.)

He said that there was a growing consensus in the financial community that the US economy was almost certainly going to collapse completely within the next five to eight years and that hyper-inflation of the US dollar was "inevitable." Savings, both in US dollars and in bonds would become worthless, the result being a general drawdown of the entire economy to the point where manufacturing would either cease or be regulated to low-pay "third-world" type jobs and whatever portions of the service industry that survived. Everything would cost about three times what it does now but wages would be significantly lower (assuming you could get a job).

While I think there is some argument about the timing and the severity of this, most economic analysts would agree (he says) with the basic predictions. His argument was much longer and fairly complicated and I don't pretend to understand it. That's why I go to him in the first place, to explain stuff like this. :)

This might sound a bit shallow of me but ...

the first thing I thought of was what does this mean in terms of Apple's future?

I mean I have friends down there and I care about the US and all but, if it's really the foregone conclusion that it seems to be, there is nothing I can personally do about it. What do people (Americans especially) think about all this?

- Will Apple move it's headquarters to Europe or Canada?
- Would the cost of Apples stuff go up or down relative to the US price?
- Does it make sense to even care about the prospects of digital downloads if half the US is going to be too poor to buy a computer?

This is a serious post and I want to know what people down there think (including if you think my analyst is crazy).

[rdowns]

Oh please, I'd find another advisor were I you.

[Rodimus Prime]

your advisory is an idiot and it might be a good idea to find another one. If that happened the rest of the world would be having huge economic problems. Thinking other wise is just being blind. To much is tied to to the US economy. It is to much of the world economy not to heavily effected.

If we look back to the great depression the US was not the only one in a depression. Europe was in economic troubles as well.

The computing industry as a whole would be pretty much dead. MS would be in trouble and like it or not Apple has very little effect on the OS market share. With the only major player down and largest minor player (apple) also in its own trouble there will not be an OS to support it.

[ucfgrad93]

Oh please, I'd find another advisor were I you.

I hate to say it, but I agree. Most countries go through their ups and downs economically, but a complete collapse of the US economy isn't going to happen.

[dpaanlka]

I wouldn't take any advisor that believes nonsense like that too seriously. Now is probably a good time to find a different one.

[t0mat0]

As the banking markets are interelated, i'd highly doubt you could have an isolated and yet complete collapse of such a large country's finances.

I'd check out Thomas Newman, and in particular, his sketch section about "the magic chequebook" as an analogy to the USA's current predicament.
I think they're in very shakey ground ( debt bought out by China, phoney oil war put on the national credit card (somewhere near the $1trillion mark all told last time I checked).

In relations to apple, if there is a depression (which the US is on the verge, if not started Dec 07 Jan 08) then you'd have less consumer spending, and the first thing to go would be nonessential purchases, with essentials reigned in too. Marketing regarding cost efficiency, durability, price, longevity etc would be more effective.

As for the level of crisis - the cost of gold is a rough rule of thumb - people have been jumping on it as it's a more steady secure thing. We haven't seen the brunt of mortgage crisis SIV or housing bubbles yet, with 2008 being the year. Get rid of your debt, save, don't spend what you can't afford. Simple things. moneysavingexpert.com could easily help.

[thechidz]

I am in Canada and I was talking to my financial advisor the other day (who works for one of the larger banking institutions up here.)

He said that there was a growing consensus in the financial community that the US economy was almost certainly going to collapse completely within the next five to eight years and that hyper-inflation of the US dollar was "inevitable." Savings, both in US dollars and in bonds would become worthless, the result being a general drawdown of the entire economy to the point where manufacturing would either cease or be regulated to low-pay "third-world" type jobs and whatever portions of the service industry that survived. Everything would cost about three times what it does now but wages would be significantly lower (assuming you could get a job).

While I think there is some argument about the timing and the severity of this, most economic analysts would agree (he says) with the basic predictions. His argument was much longer and fairly complicated and I don't pretend to understand it. That's why I go to him in the first place, to explain stuff like this. :)

This might sound a bit shallow of me but ...

the first thing I thought of was what does this mean in terms of Apple's future?

I mean I have friends down there and I care about the US and all but, if it's really the foregone conclusion that it seems to be, there is nothing I can personally do about it. What do people (Americans especially) think about all this?

- Will Apple move it's headquarters to Europe or Canada?
- Would the cost of Apples stuff go up or down relative to the US price?
- Does it make sense to even care about the prospects of digital downloads if half the US is going to be too poor to buy a computer?

This is a serious post and I want to know what people down there think (including if you think my analyst is crazy).

As much as Canadiens hate the US its not going to change the fact that your economy largely depends on ours

[Rodimus Prime]

There is no douting the US is heading in to a recession and I willing to bet in the near future the rest of the world will head into a recession. Reasoning being is just part of the cycle. It goes up and down but generally climbs. Last one the US went into was brought on my Europe going into one. This one I think is going to be brought on by the US.

I think the housing crises is near about over and recovery will begin. Leaders will be more careful in the future and not give out loans to people they should not given out loans to. I think the American public is going to wise up some and start saving. Part of the issue is American have had a near 0% saving rate to in some years a negative saving rate. Problem with 0% is it is clear sign people are living paycheck to paycheck with no real way to take on an unexpected cost. Negative you have it is even worse because it means debt load is increasing.

As for saving I think it is good idea to have at least 3 months expenses in savings (6 months is better) and try to keep growing it. This allows one to take on a unexpected cost.

[MacNut]

You could argue that Apple is highly over valued at the moment and is due for a bit of a drop. Most of the markets are over valued. The second dot com bust could happen.

There are safe guards in place to make sure the market doesn't have a massive collapse like the Great Depression.

[maestrokev]

First of all, if you're speaking to an advisor who works for a bank then he/she has an agenda to sell you products. If you want honest advice, hire an independent financial adviser not one who couldn't make it on their own and needs the umbrella of a bank's mutual fund to shield his inability to earn a living.

I doubt any major world economy can collapse like that, the world community would not allow it because there are repercussions for everyone else. Look at all the foreign injection of money into Citibank.

If that were to happen, Apple would be the least of your worries.

And do you really think the American government or people would let their country financially implode like that? That's as silly as saying that the subprime mortgage conjecture is real - it's impossible that a country that rich and advanced would take advantage of their own people like that! :rolleyes:

[thejadedmonkey]

If all of Apple's money is in the stock market, well, Apple will lose a LOT.

If all of Apple's money is in the bank, and the dollar falls to 1/3 of its value, Apple fortune will be 1/3 of what it currently is.

If Apple puts their money into Euros, nothing will happen. If euros remain stable that is.

I can see it coming, the retail industry is suffering pretty bad right now. I'm a full time student living paycheck to paycheck just because I make <$100 on an average week, and even I'm going to start saving as much as I physically can.

[Rodimus Prime]

I was thinking about this tread and I might like to add some more to the picture showing that you need a new financial advicor.

We can look back at history of a country that got hit by hyper inflationizm and they recovered in a fairly short time span to be back competitively with the rest of the major players. That country is Germany. After WWI they had a huge hyper inflation of the mark. Very few jobs and so on.

If anything like that ever happen in the US I would be scared for the rest of the world because yes it is the US and on top of that war starts looking pretty good. If one thing has shown though out history war is good for business. It is what pull Germany out of it Depression, it is what pulled the US out of the great depression along with most of Europe. It is after the war that problems tend to happen.

[SthrnCmfrtr]

We can look back at history of a country that got hit by hyper inflationizm and they recovered in a fairly short time span to be back competitively with the rest of the major players. That country is Germany.

*blinks*

[Virgil-TB2]

... We can look back at history of a country that got hit by hyper inflationizm and they recovered in a fairly short time span to be back competitively with the rest of the major players. That country is Germany. After WWI they had a huge hyper inflation of the mark. Very few jobs and so on... Well this is not exactly a good example.

Germany after World War 2 was in a bad spot, and the Western part did recover, but it's recovery was due to massive foreign (US mostly) investment. So it didn't exactly "recover" it was "recovered" on purpose by the US who poured massive funds into it and rebuilt the infrastructure.

If the US economy is in the same position and no one steps up to save it, it won't recover very fast at all. That's the point. The infrastructure is already failing and without massive investment, it won't recover. This would be more like what happened to East Germany.

[Virgil-TB2]

As much as Canadiens hate the US its not going to change the fact that your economy largely depends on oursI know Americans like to think this but it's also not really accurate.

While there are a million links and interdependencies between the economies and while the failure of one will undoubtedly affect the other, what we are talking about here is the basic financial viability of each.

The problem in the US is the ultra-massive-never been-seen-in-history DEBT. Your debt is being "held" by the other countries, and the very reason it might collapse is that these other countries might just stop loaning you cash.

Canada on the other hand is not in any significant debt, has a strong currency based on resources, real growth, better banking controls etc. Same as Europe.

If the US goes down, the trade balance will be affected and so on but our dollar is based on real value, resources and so forth. Ask any financial advisor and they will tell you that this purported economic collapse will not necessarily affect the value of currency. For us it will be more about finding someone else to sell the resources to and finding other places to buy our imports.

[dukebound85]

if the us went into a recession, apple would be the least of my worries...

[twoodcc]

yeah, i don't really see what your advisor is thinking

[Virgil-TB2]

... do you really think the American government or people would let their country financially implode like that? That's as silly as saying that the subprime mortgage conjecture is real - it's impossible that a country that rich and advanced would take advantage of their own people like that! :rolleyes:This is the whole point though isn't it?

The US *has* allowed this to happen. The debt is already there, it's just a matter of when the loans are going to be called in.

The point is that the US is really only "rich" on paper at the moment.

Like a guy in a shiny SUV wearing thousands of dollars worth of bling talking on his iPhone who bought it all on credit. The minute he is asked to start paying it back, he would instantly transform into a poor guy rummaging through the trash, cause the SUV and the bling are not really his, he is borrowing them.

As the banking markets are interelated, i'd highly doubt you could have an isolated and yet complete collapse of such a large country's finances....I keep hearing this, but no one says why this is supposed to be the case.

The markets are inter-related, but that doesn't stop country A, B, or C from having it's currency devalued. It happens all the time and could conceivably happen to the US couldn't it? I don't see why not. Such "adjustments" happen in the third world regularly. As well as in some of the East block countries when they joined Europe.

Perhaps I am not being clear when I am using that "collapse" word. I don't mean some kind of post-apocalyptic Mad Max collapse, I mean the currency could easily collapse.

If you have a debt, eventually you have to pay it off right? In some kind of real terms? Something with actual value? The only way to pay off the US debt, would be by raising taxes by a massive amount, or by devaluing the dollar by a similar massive amount.

If China sold it's dollar holdings tomorrow and bought Euros instead, the US would tank in a matter of weeks it seems to me.

[Rodimus Prime]

I think it is funny people think that a US financial collapse would not take the world down with them. It plainly stupid to think other wise. You can not take the one of the worlds if not the worlds largest economy out of the picture and it not heavily effect others. Canada and Mexico would be the first to countries to heavily feel the effects of it. Followed shortly by the EU. It is a domino effect. One country goes down it takes another which takes another and so on. The last recession has that effect. the Great depression was caused by that.

But hey if one things been learned is people do not see the big picture.

[dukebound85]

I think it is funny people think that a US financial collapse would not take the world down with them. It plainly stupid to think other wise. You can not take the one of the worlds if not the worlds largest economy out of the picture and it not heavily effect others. Canada and Mexico would be the first to countries to heavily feel the effects of it. Followed shortly by the EU. It is a domino effect. One country goes down it takes another which takes another and so on. The last recession has that effect. the Great depression was caused by that.

But hey if one things been learned is people do not see the big picture.

i agree, believing anything else is ignorant

[Rodimus Prime]

I keep hearing this, but no one says why this is supposed to be the case.

The markets are inter-related, but that doesn't stop country A, B, or C from having it's currency devalued. It happens all the time and could conceivably happen to the US couldn't it? I don't see why not. Such "adjustments" happen in the third world regularly. As well as in some of the East block countries when they joined Europe.

Perhaps I am not being clear when I am using that "collapse" word. I don't mean some kind of post-apocalyptic Mad Max collapse, I mean the currency could easily collapse.

If you have a debt, eventually you have to pay it off right? In some kind of real terms? Something with actual value? The only way to pay off the US debt, would be by raising taxes by a massive amount, or by devaluing the dollar by a similar massive amount.

If China sold it's dollar holdings tomorrow and bought Euros instead, the US would tank in a matter of weeks it seems to me.

Minus one fact. Worlds banks would not let that happen they would do a lot to hold up the value of the dollar because to much investments are involved in it. Plenty of countries in the EU have investments in the dollar.

[elmo151]

The US *has* allowed this to happen. The debt is already there, it's just a matter of when the loans are going to be called in.

The point is that the US is really only "rich" on paper at the moment.

you may want to take an economics course at your local community college; and you should invite your advisor to join you.

The USA is Canada's largest trading partner. Mind the old aphorism: When the US catches a cold the rest of the world isn't far behind". Your advisor is predicting a global meltdown. Not likely in todays connected and regulated world. A recession(a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.) may happen. A worldwide depression--possible, but not likely. At least lets hope not..

There are investment vehicles to minimize exposure to major economic dislocation. Ask your investment advisor about them

[kimkrause]

take a look at england and most of africa...then check out india! of course we are all in **** right now. i have to laugh when i see people from america on tv crying about losing their house when the interest rate is only 4 or 5 % . then you see their house and it's got a huge fridge, wide screen tv, closets bursting with clothes, brand new cars.....give me a break...try living in south africa where interest on a mortgage is over 13% and going up every 3 months. on top of that only 35% of the country is employed and supports the other 65% who live in shacks and keep on having babies. time for a reality check here. time to stop living above your means.......

[zap2]

Thats not going to happen...the fact your advisor said its universally agreed on, would make me run from him as fast as I could.

[Eraserhead]

try living in south africa where interest on a mortgage is over 13% and going up every 3 months.

In South Africa houses are probably considerably cheaper compared to average salary compared to the US/UK.

The US has a problem in that its transportation system is entirely dependent on oil, and that it is also a large country. Compared to countries like France and Germany which have very efficient rail networks, which are powered by electricity, which means they can more easily switch to renewable energy sources.

[IJ Reilly]

Thats not going to happen...the fact your advisor said its universally agreed on, would make me run from him as fast as I could.

No kidding. If my "financial advisor" said this to me, he'd instantly feel a breeze followed by a slamming door.

There is no douting the US is heading in to a recession and I willing to bet in the near future the rest of the world will head into a recession.

Actually, there's plenty of doubt.

I know Americans like to think this but it's also not really accurate.

In fact it is totally accurate, except for the "Americans like to think" part. The United States is Canada's largest trading partner, and vice-versa. Anyone who "likes to think" otherwise is just plain wrong.

[EricNau]

There is no douting the US is heading in to a recession...
It's thoughts such as those that cause a recession.

The problem in the US is the ultra-massive-never been-seen-in-history DEBT.
We've had that debt for years. If it was going to cause a massive collapse of our economy, it would have done so years ago.


Luckily, Apple doesn't have their capital in Dollars, Euros, Pounds, or even gold; it's in iPods, the world's most stable and dependable currency. :D

[Eraserhead]

We've had that debt for years. If it was going to cause a massive collapse of our economy, it would have done so years ago.

Not if countries like Saudi Arabia and China decided to rapidly withdraw their investments in your economy, the Saudi's at least own 10% of the US economy, and China has invested a lot of money in the US economy as well.

The OP may have a point, but I think its unlikely to come about, as a lot of other people would be screwed too.

[zap2]

Not if countries like Saudi Arabia and China decided to rapidly withdraw their investments in your economy, the Saudi's at least own 10% of the US economy, and China has invested a lot of money in the US economy as well.

The OP may have a point, but I think its unlikely to come about, as a lot of other people would be screwed too.


Why would they pull out? Their making money...which is their goal.

[juanm]

And speaking in real terms... How much would a Nikon D3X cost me in the US? :D

[shikimo]

As the banking markets are interelated, i'd highly doubt you could have an isolated and yet complete collapse of such a large country's finances.

I'd check out Thomas Newman, and in particular, his sketch section about would be economically damaged in the process"the magic chequebook" as an analogy to the USA's current predicament.
I think they're in very shakey ground ( debt bought out by China, phoney oil war put on the national credit card (somewhere near the $1trillion mark all told last time I checked).

I agree...Newman's article is spot-on.

And you are also correct that there is no US financial trouble without worldwide financial trouble. Same goes for China, India and the Eurozone. The OP and others who still view the world economy as delineated by geographical boundaries are missing the primary change in macroeconomics in the last 30 years: we all need each other now. In an ironic way, this may be the very fact that prevents a major collapse...if we can all find some leaders who can see beyond the end of their election terms.

If China sold it's dollar holdings tomorrow and bought Euros instead, the US would tank in a matter of weeks it seems to me.

Sure that's theoretically true...but it can't happen, because it is not in China's interest to inflict that level of damage upon its fledgling, if soon to be dominant, economy. No one with any holdings in USD wants to buy Euros right now, especially a major investor like China or Saudi Arabia. People (and national governments) buy things so they can sell them later when they are worth more, not get robbed by selling their assets when they're at their lowest value in decades. The dollar will rebound--be it in two years or 15 years or ??? years--and its investors will be happy when it happens, myself included.

There is another curious thing that's gone on here: although one of the goals of a single European currency was to draw foreign investment away from the dollar, it hasn't happened at nearly the levels EU officials had hoped; really rich people and governments continued to seek refuge in USD until very recently, and now they are terrified to turn to the Euro because of its unwieldy price tag and future risk. The Euro has never been this valuable (not just against the sagging dollar: I got 167 yen per Euro on a recent trip to Japan!!), it's killing major European export numbers, and no one knows what to think of it. Since big money hates uncertainty, there is virtually no chance of a massive move towards the Euro. The debate in Europe over whether or not the Euro was a good idea comes up over here way more than I ever would have guessed.

I'm in no way trying to minimize the seriousness of the economic situation in the US right now: it's serious and needs to be taken into account when planning investment strategy. But to suggest that US markets are a) on the verge of collapse, or b) could undergo such a collapse without damaging every market on the planet is ludicrous and ignorant at an astonishing level.

[Macmaniac]

Apple is fine, in my opinion now is a great time to buy Apple Stock, it just took a hit because of the market doing poorly. You could probably make a couple of easy bucks once Apple releases their quarterly numbers which are going to be solid. The stock has taken a beating not because the company is doing badly, in time it will regain strength because the overall base of the company is strong, marketshare is up, sales are improving, and the weak dollar might held drive sales with European visitors picking up stuff here in the us for cheap.

[mac-er]

Your financial advisor is incompetent and should reported to the Canadian regulatory board, immediately. Seriously.

The worst financial crisis that the U.S. was in was the Great Depression. The U.S. economy is no where near that, at all.

Think about it, if the U.S. economy, the largest economy in the world was 5-10 years away from complete collapse, I think you would hear a bit more about it in the mainstream media. I also don't think that foreign companies and governments would be investing in the U.S. economy right now.

[Chrispy88]

Not if countries like Saudi Arabia and China decided to rapidly withdraw their investments in your economy, the Saudi's at least own 10% of the US economy, and China has invested a lot of money in the US economy as well.

The OP may have a point, but I think its unlikely to come about, as a lot of other people would be screwed too.

Where do you see the statistic that the Saudi's own 10% of the U.S. economy? Let's see some citations :)

[thechidz]

Where do you see the statistic that the Saudi's own 10% of the U.S. economy? Let's see some citations :)

He got it from "Fahrenheit 911" A very reputable source:rolleyes:

[maestrokev]

This is the whole point though isn't it?

If China sold it's dollar holdings tomorrow and bought Euros instead, the US would tank in a matter of weeks it seems to me.

If you're worried you need to hedge your bets. Google "John Paulson" nice writeup about him in WSJ (http://online.wsj.com/article/SB120036645057290423.html). When everyone thought the US housing market was unbreakable he bet against it and is now raking in the billions every time someone loses their house. He took the contrarian view and is now living the American dream along with this guy (http://online.wsj.com/article/SB120036270913390155.html).

On Wall Street, the losers in the collapse of the housing market are legion. The biggest winner looks to be John Paulson, a little-known hedge fund manager who smelled trouble two years ago. Funds he runs were up $15 billion in 2007 on a spectacularly successful bet against the housing market. Mr. Paulson has reaped an estimated $3 billion to $4 billion for himself -- believed to be the largest one-year payday in Wall Street history. Now, in another twist in financial history, Mr. Paulson is retaining as an adviser a man some blame for helping feed the housing-market bubble by keeping interest rates so low: former Federal Reserve Chairman Alan Greenspan.

[maestrokev]

I hate to say it, but I agree. Most countries go through their ups and downs economically, but a complete collapse of the US economy isn't going to happen.

Guess it depends on what people define as a collapse. I thought what Enron did to California was pretty funny, the stuff of movies, but some people would say that was an energy collapse :D

[eric55lv]

The US is not the only one that is effected Mexico is now worring about its economy

[kimkrause]

actually houses are about the same price and income is about 1/3 to 1/4 of north america so maybe now you see the problem.....add huge interst rate increases and you can see why i have a hard time feeling sorry for some people. oh and did i mention that crime was about 100 times worse...

[Eraserhead]

Why would they pull out?

To hurt you, its unlikely, but if more extreme elements got power in Saudi Arabia it could happen...

[Unspeaked]

I hate to contribute to this thread, as it's one of the most ridiculous ones I've seen posted here recently (trolling, perhaps?) but I just thought I'd mention that Asian markets tanked today due to concerns over the US economy.

The Nikkei had its greatest single day loss in nearly 10 years and the Hang Seng was down the most in one day since the 9/11 attacks.

If the OP truly thinks the US economy can collapse to the point of pulling down the nation to third world world status yet leave the rest of the world's economies untouched, that displays a level if ignorance I find hard to believe exists.

If they think this could happen with all the world's economies in ruin save for Canada's, that would be even more incredible.

[carbonmotion]

While I think there is some argument about the timing and the severity of this, most economic analysts would agree (he says) with the basic predictions. His argument was much longer and fairly complicated and I don't pretend to understand it. That's why I go to him in the first place, to explain stuff like this. :)



Your financial adviser seems to be of questionable merit...
Please, talk to someone from HSBC, UBS, or Morgan Stanley.

[Virgil-TB2]

you may want to take an economics course at your local community college; and you should invite your advisor to join you.

The USA is Canada's largest trading partner. Mind the old aphorism: When the US catches a cold the rest of the world isn't far behind". Your advisor is predicting a global meltdown. Not likely in todays connected and regulated world. A recession(a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters.) may happen. A worldwide depression--possible, but not likely. At least lets hope not..

There are investment vehicles to minimize exposure to major economic dislocation. Ask your investment advisor about themI think this thread is long dead, (but curiously prescient considering this weeks events), ;) but I have to post that most of you people criticising my viewpoint (and that of a competent advisor in one of Canada's largest banks), are exaggerating for your own benefit.

In the first place, you are translating my description of a monetary collapse into a scenario that I was never promoting in the first place. It seems like everyone is assuming that I am referring to some kind of post-apocalyptic future when I clearly was not. What I am thinking is a world-wide recession (already here by some accounts), but that in the US, this "recession" will be more like a depression in effect.

Secondly, I never argued that the world's largest economies are not inextricably linked and that the effects would also be felt in other countries. US citizens seem to always strongly exaggerate their importance to the world economy and their place in it. The world would survive if the US just disappeared one night, I can assure you. What my advisor is saying is that the US dollar could easily collapse, and it probably will. It may not happen overnight like the 30's depression, but it will pretty much *have* to happen unless the US gets it's financial house in order. As I said before debt is debt and all the wishing won't make it any different.

Take a look at the mitigating measures that are happening right now. US economists and banks are still trying to "stimulate" growth and spending by lowering interest rates. Thats just like extending more credit and hoping for the best. The real problem is systemic debt and lack of market and bank regulation.

The US seems to still be hanging on to that idea that a totally free open market with no regulation will ultimately save them. It simply won't. Every other major western country has moved away from this idea because it has never worked. It did not work with Reagan-omics, it hasn't worked with Bush-onomics. It will simply *never* work. The only solution is real fiscal conservatism, not the "let's pretend" variety.

The banks and the loaning institutions need to be more closely regulated and controlled. This is also the way of pretty much the entire rest of the world. You can't just sit back and hope that lending institutions don't make a whole bunch of fast and loose loans (the current source of the problem), because people are dumb as bricks and will keep borrowing until they are in debtors jail. You have to regulate in a sensible way.

The US is indeed entwined in the rest of the worlds economies, but mostly as a purchasing engine. It produces less and less year by year and becomes more and more of a net consumer of goods and services. If the US economy fails it means that exports will decrease in the other countries, like Canada and Europe because the US is a big market. So we will all be making a bit less money for the short term, thus a world-wide recession. The US on the other hand will be totally screwed for a long long time if this happens. Other markets, especially in the third world countries, emerge over time, manufacturing can be ramped up again as new markets are discovered and developed.

What for the rest of the world will be a short recession, for the US will be a deep ***** up that they won't recover from for a long time. During the coming recession, your assets will be bought up by others, high-end manufacturing will shut down and move elsewhere, etc. By the time it's over, the US could look more like Mexico than the US of old.

I never said that the effects would not be world wide, just that they would be a heck of a lot worse in the US. I am saying that the other economies have more real value both in their currencies and in their manufaturing sectors to weather it out. The US does not.

Ask yourself why when the US stock market posted one of the biggest losses in history yesterday, the Canadian Stock Exchange and the European sock exchanges went up (and by significant amounts too). :eek:

[IJ Reilly]

Ask yourself why when the US stock market posted one of the biggest losses in history yesterday, the Canadian Stock Exchange and the European sock exchanges went up (and by significant amounts too). :eek:

The US stock markets did not "post one of the biggest losses in history yesterday." Not even remotely close. So once again, if anyone told you this you need to seriously question their knowledge.

[Unspeaked]

Ask yourself why when the US stock market posted one of the biggest losses in history yesterday, the Canadian Stock Exchange and the European sock exchanges went up (and by significant amounts too). :eek:

What are you talking about?

The US market was only down 120 points or so yesterday.

The European indexes were down Monday - when the US market was closed due to a holiday - and yesterday.

In fact, the UK, French and German indexes tanked. The German market alone was down nearly 8%, and has some major debt and labor issues of its own.

I already established the Asian markets plummeted, as well.

And as for your beloved Canadian index:

"REUTERS - The Toronto Stock Exchange's main index, fresh off a sharp reversal of fortune, is set to drop on Wednesday as investors factor in the increased likelihood of an economic slowdown, and commodities tumbled."

As much as you might like to believe otherwise, Canada would be in just as dire straights - if not worse - than the US if the latter were to enter a depression. Canada's got a lot of debt of its own, nearly $500 billion, and even if a situation arose where the rest of the world's economy's managed to rebound despite the US, our neighbors to the north are too closely tied to our economy.

And contrary to your belief, two thirds of Canadian imports are from the US, so the country is obviously still producing something, and Canadians are buying.

Again, you might want to get a new financial advisor. I'd be more concerned with his or her ideas than the size of the bank they work for.

[carbonmotion]

Ask yourself why when the US stock market posted one of the biggest losses in history yesterday, the Canadian Stock Exchange and the European sock exchanges went up (and by significant amounts too). :eek:


It seems pretty unique advice from fin. adv. from a big bank. Would you mind dropping the name of the adviser and institution? If not the adviser, then at least the name of the institution.

[ErikCLDR]

Not to point out the obvious but if the US economy dies than pretty much all companies will be affected.

[furcalchick]

i have a question. should i start investing in euros or other foreign currencies now in case of this us economic collapse were to happen? can someone explain to me in plain english what we might be headed towards in the near future?

[John Purple]

i have a question. should i start investing in euros or other foreign currencies now in case of this us economic collapse were to happen? can someone explain to me in plain english what we might be headed towards in the near future?

Cash is king. Nobody knows where the markets are heading to. You hear all kind of advices like "never catch a falling knife" or buy as it is only a short dip...
Personally I prefer to miss a gain than to make a loss come true :o

[Unspeaked]

i have a question. should i start investing in euros or other foreign currencies now in case of this us economic collapse were to happen? can someone explain to me in plain english what we might be headed towards in the near future?

I really don't think a panic exchange of dollars into euros makes much sense right now.

If there really is a "US economic collapse," then euros won't be much better off than dollars.

I would just say avoid stocks for the near term since they're too volatile and maybe take advantage of the low interest rate by paying off debt, etc.

Dollars are just fine, especially if you don't plan to emigrate.

[MacNut]

Best advice is just to save your money, don't invest it, don't spend it. Save it for a rainy day.

[foidulus]

While I feel that the US is heading for a slowdown and that stagflation is almost sure to return, there won't be any sort of "meltdown" most likely. The fact is that there are too many players and too much wealth caught up in a very complex system that sometimes has agreements that last years if not decades. Not to mention the US financial empire, largely built up after WWII has its hands in too many places to totally melt down.

That being said, I think both your advisor and Herr Bernanke both lost track of the big picture admist all the data. In today's society we can get information as fast as we want it, such as news, opinions, and opinions guised as news. However, with so much information, almost everyone(myself included) can lose their sense of perspective and treat what would otherwise be mild bad news as the end of the world because everyone seems to be sounding alarm bells. The fact that almost everyone can trade from home/work/on the go(thanks iPhone!:p ) and automated trading programs, even the slightest bit of news, good or bad, can send everyone into a frenzy. It's amazing to watch as the Dow has one of the biggest drops on record be separated by only a few weeks from one of the biggest gains on record.

What I find most amazing is how people's reactions to news, whether good or bad, can have a significant amplifying affect. Often people's reactions to what would otherwise be mild bad news turn it into a catastrophe. Whenever you hear/read something that sensational, I would recommend you take a step back to look at the bigger picture.

That being said, thanks to Mr. Bernanke's overreaction I wouldn't recommend holding very many US based stocks, and no index/mutual funds. If you can pick out a few good individual stocks I would hold onto them, and I would recommend you invest outside of North America.

[furcalchick]

i wasn't seriously thinking about investing my money, i was just inquiring about certain situations based on what i've read earlier in this thread. i don't have investments, my cash is in the bank (unless i should take it out of there too). i probably won't invest into the stock market for a long while due to personal reasons, not related to this latest dip.

[aloofman]

In the first place, you are translating my description of a monetary collapse into a scenario that I was never promoting in the first place. It seems like everyone is assuming that I am referring to some kind of post-apocalyptic future when I clearly was not. What I am thinking is a world-wide recession (already here by some accounts), but that in the US, this "recession" will be more like a depression in effect.

Glad to see that you're backtracking. In your original post you claimed that "He said that there was a growing consensus in the financial community that the US economy was almost certainly going to collapse completely within the next five to eight years". When you say "collapse completely", how are we supposed to interpret that as a mere currency devaluation? You didn't say the dollar, you said "the US economy." That's very, very unlikely, if only because the rest of the world's financial powers wouldn't risk letting it happen. They all have too much to lose.

What my advisor is saying is that the US dollar could easily collapse, and it probably will. It may not happen overnight like the 30's depression, but it will pretty much *have* to happen unless the US gets it's financial house in order. As I said before debt is debt and all the wishing won't make it any different.

The debt issue is surely going to cause financial difficulties for years to come, no question. But the US dollar did not collapse "overnight" during the Great Depression. The stock market had an initial hard crash in October 1929 that woke everyone up to how illusory the financial situation was. The stock market then kept declining, farm prices collapsed, and international trade slowed drastically. Inflation was disastrous in Germany, but in the US the Depression was a downward spiral of economic contraction and deflation instead. People were afraid to spend money because they didn't have jobs, so businesses and banks went under, which made people more afraid to spend money, and so on.

Take a look at the mitigating measures that are happening right now. US economists and banks are still trying to "stimulate" growth and spending by lowering interest rates. Thats just like extending more credit and hoping for the best. The real problem is systemic debt and lack of market and bank regulation.

I agree.


The US is indeed entwined in the rest of the worlds economies, but mostly as a purchasing engine. It produces less and less year by year and becomes more and more of a net consumer of goods and services.

While the consumption claim is fair, it's not true that the US economy is "producing less and less year by year". What is your basis for this? It's not that the US is producing less, it's that it's consuming even more.

What for the rest of the world will be a short recession, for the US will be a deep ***** up that they won't recover from for a long time. During the coming recession, your assets will be bought up by others, high-end manufacturing will shut down and move elsewhere, etc. By the time it's over, the US could look more like Mexico than the US of old.


This is a bit naive. Many countries around the world (China, Japan, South Korea, Germany, etc.) depend heavily on exports to keep their economies going. All of these countries have aging -- and eventually, declining -- populations that require exports to keep their economies growing. They can't afford to let the US market dry up. It's not about us relying on them to "save" us. It's pure self-interest. And the US has so many major economic advantage over Mexico that nothing short of a large meteor impact will turn the US economy into Mexico's.

Your underlying point is sound: that the US has put itself into too much debt and risks major financial difficulties. That's the point that there's a consensus about. But your other claims are really exaggerated and/or economically bizarre, so much so that it completely overshadows your original concern about how it would affect Apple's bottom line.

[Rhosfelt]

OMG Y2.8k look out! Quick buy water and canned food with Euros! :eek:

[Unspeaked]

i wasn't seriously thinking about investing my money, i was just inquiring about certain situations based on what i've read earlier in this thread. i don't have investments, my cash is in the bank (unless i should take it out of there too). i probably won't invest into the stock market for a long while due to personal reasons, not related to this latest dip.

You're in good shape, then. Don't lose any sleep over any of this.

The only way you'd be in trouble with your money in the bank is if the whole FDIC system collapses, in which case not having access to your bank will be the least of your troubles... :eek:

[shikimo]

I think this thread is long dead, (but curiously prescient considering this weeks events), ;) but I have to post that most of you people criticising my viewpoint (and that of a competent advisor in one of Canada's largest banks), are exaggerating for your own benefit.

In the first place, you are translating my description of a monetary collapse into a scenario that I was never promoting in the first place. It seems like everyone is assuming that I am referring to some kind of post-apocalyptic future when I clearly was not. What I am thinking is a world-wide recession (already here by some accounts), but that in the US, this "recession" will be more like a depression in effect.

Secondly, I never argued that the world's largest economies are not inextricably linked and that the effects would also be felt in other countries. US citizens seem to always strongly exaggerate their importance to the world economy and their place in it. The world would survive if the US just disappeared one night, I can assure you. What my advisor is saying is that the US dollar could easily collapse, and it probably will. It may not happen overnight like the 30's depression, but it will pretty much *have* to happen unless the US gets it's financial house in order. As I said before debt is debt and all the wishing won't make it any different.

Take a look at the mitigating measures that are happening right now. US economists and banks are still trying to "stimulate" growth and spending by lowering interest rates. Thats just like extending more credit and hoping for the best. The real problem is systemic debt and lack of market and bank regulation.

The US seems to still be hanging on to that idea that a totally free open market with no regulation will ultimately save them. It simply won't. Every other major western country has moved away from this idea because it has never worked. It did not work with Reagan-omics, it hasn't worked with Bush-onomics. It will simply *never* work. The only solution is real fiscal conservatism, not the "let's pretend" variety.

The banks and the loaning institutions need to be more closely regulated and controlled. This is also the way of pretty much the entire rest of the world. You can't just sit back and hope that lending institutions don't make a whole bunch of fast and loose loans (the current source of the problem), because people are dumb as bricks and will keep borrowing until they are in debtors jail. You have to regulate in a sensible way.

The US is indeed entwined in the rest of the worlds economies, but mostly as a purchasing engine. It produces less and less year by year and becomes more and more of a net consumer of goods and services. If the US economy fails it means that exports will decrease in the other countries, like Canada and Europe because the US is a big market. So we will all be making a bit less money for the short term, thus a world-wide recession. The US on the other hand will be totally screwed for a long long time if this happens. Other markets, especially in the third world countries, emerge over time, manufacturing can be ramped up again as new markets are discovered and developed.

What for the rest of the world will be a short recession, for the US will be a deep ***** up that they won't recover from for a long time. During the coming recession, your assets will be bought up by others, high-end manufacturing will shut down and move elsewhere, etc. By the time it's over, the US could look more like Mexico than the US of old.

I never said that the effects would not be world wide, just that they would be a heck of a lot worse in the US. I am saying that the other economies have more real value both in their currencies and in their manufaturing sectors to weather it out. The US does not.

Ask yourself why when the US stock market posted one of the biggest losses in history yesterday, the Canadian Stock Exchange and the European sock exchanges went up (and by significant amounts too). :eek:

The number of false macroeconomics premises underlying this post is too big to detail, not to mention the factual errors re recent market developments...and this observation from someone who will never be seen defending US economic policy. I'm with the poster who wants to know the name of the bank and advisor from whence this absurd commentary allegedly emanated.

[doug in albq]

(maybe it is a planned economic melt-down, so as to usher in the NAU and the Amero. On our way to you know where...)

You will not think i sound so crazy in a few years I bet.

[EricNau]

Best advice is just to save your money, don't invest it, don't spend it. Save it for a rainy day.
Isn't that what leads to a recession in the first place?

[Davincij]

The American dollar is and will collapse it is no longer just a possibility but an inevitability. Many of the greatest financial gurus or leaving America. Peter Shiff who has been consistently correct. Jim Rogers has sold his home and his assets. Ron Paul a congressman from Texas talked about the coming collapse of the currency. Finally Dick Cheney who has moved all his money out of America long ago.

I join this forum in the hopes of save a few people as most of you will say it will never happen. However it is my hope as a caring person a few of you will look into what I am talking about.

http://www.youtube.com/watch?v=4n3g5lUgkWk
http://www.youtube.com/watch?v=FwGUTGCvz7I
http://video.google.com/videoplay?docid=-9050474362583451279
http://www.youtube.com/watch?v=MCt2yRqlCcQ

good luck buy gold and silver.

Quotes from dead people...
"By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens." --John Maynard Keynes (1883-1946)

"I believe that banking institution are more dangerous than standing armies... If the American people ever allow private banks to control the issue of currency... the banks and corporations that will grow up around them will deprive the people of there property until their children wake up homeless on the continent their father conquered" Tomas Jefferson 1743-1826

This is what's happening and you know it's true.

Davinci

[carbonmotion]

some guy, desperate for attention, creates a few accounts to try to scare people. Who's dumber, the person who's scared by this or the guy who thinks he can actually convinced educated people in to believing this?

[miloblithe]

The US net international investment position is less than negative $2.5 trillion. That's pretty bad. But it's also only about 20% of US GDP.

Did you know that Canada's net international investment position was almost negative $400 billion in 1994? It's GDP at that point was about $525 billion per year.

In other words, Canada's net international investment position was worse in 1994 that the US situation now.

I can't believe people aren't able to look this stuff up on their own an instead just FREAK OUT about the US economy. Think!

[IJ Reilly]

Well I mean, the sky is falling, right?

[zap2]

(maybe it is a planned economic melt-down, so as to usher in the NAU and the Amero. On our way to you know where...)

You will not think i sound so crazy in a few years I bet.

Even if you're right about a meltdown(I'm thinking their will be a decline, but not a meltdown like after the USSR fell), I doubt it would be planned.

[ErikCLDR]

I'm more concerned with democratic views of the redistribution of wealth. With Hillary's plan everyone that has made a bad decision in their life will get off the hook. Shame on my parents for buying a house they can afford and spending within their means.

back on topic sure yea would could go into a recession like we did in the early 00's. Will it be a catastrophic meltdown resulting in a world of chaos... no. Eventually we'll come back, maybe not as fast as 2001 because we're dealing with the more housing market than the stock market.

[Rodimus Prime]

While everyone is making a be deal about the economy going down it is no where near as bad as the news is making it out to be.

Start looking at some key industries and you will see they are still booming. While the housing market is in the crapper right now construction as a whole is booming.

Most of the bigger companies (100mil/year plus) I know have 2+ years worth of work in back log. That means that a 100 mil/year company has 200+ mil worth or work lined up. That is insane. The construction companies are not begging for work. Heck they are still turning down jobs because they do not have enough people. They struggle getting enough people just to keep up with their current jobs. Housing is in bad shape but other types are doing great. But the news is not going to tell you that because who cares about the truth any more.

[dsl4c]

wow, a US financial collapse? funny.. i've made more money in the last 8 years, and I have plenty of cash saved in the bank..

[Davincij]

some guy, desperate for attention, creates a few accounts to try to scare people. Who's dumber, the person who's scared by this or the guy who thinks he can actually convinced educated people in to believing this?

The way I see it is you can blindly believe what this man is telling you or you can research both sides of the the argument. I think you would be a fool to simply agree with me blindly as well. I only created the account because I stumbled upon this site researching the effect the event would have in Canada and feeling badly for Americans I wanted to try and warn some people. I know very well most will dismiss me but it is my hope that a few will take the time to find out if I am tell the truth or not.

I do this for you because Ron Paul did this for me when he talked about the gold standard and I did not know what he was talking about. After much research I felt like I took the "Red Pill" and woke up to what is really going on.

It is my hope that a few more do as well.

I will no longer respond to flat out denials without facts or evidence to the contrary.

If you want to research what I am talking about learn about "Fractional Reserve Banking" or "Money as Debt".


Davinci
PS My financial adviser knows nothing about the collapse and expect to loose money, Euro Pacific Capital knows this and expect to make a lot of money this year.

[Rodimus Prime]

The way I see it is you can blindly believe what this man is telling you or you can research both sides of the the argument. I think you would be a fool to simply agree with me blindly as well. I only created the account because I stumbled upon this site researching the effect the event would have in Canada and feeling badly for Americans I wanted to try and warn some people. I know very well most will dismiss me but it is my hope that a few will take the time to find out if I am tell the truth or not.

I do this for you because Ron Paul did this for me when he talked about the gold standard and I did not know what he was talking about. After much research I felt like I took the "Red Pill" and woke up to what is really going on.

It is my hope that a few more do as well.

I will no longer respond to flat out denials without facts or evidence to the contrary.

If you want to research what I am talking about learn about "Fractional Reserve Banking" or "Money as Debt".


Davinci
PS My financial adviser knows nothing about the collapse and expect to loose money, Euro Pacific Capital knows this and expect to make a lot of money this year.

Well talk about some one who fried what little credibility to had left. You yet again contradicted your self. by my count that is 3 times in this tread alone.

Now you are admitting to a bold face lie.

[zap2]

wow, a US financial collapse? funny.. i've made more money in the last 8 years, and I have plenty of cash saved in the bank..

:confused:

Because you can judge something made up of 300+ Million people through one example :rolleyes:

[dpaanlka]

The way I see it is you can blindly believe what this man is telling you or you can research both sides of the the argument.

In my experiencing of debating various conspiracy theorists, as well as crazy Ron Paul people, I've found that they love to try and take the moral high ground by suggesting I "research" the facts behind all positions of a debate equally. The problem is they throw fits and pout when it all points to "you're wrong" and call you biased, brainwashed, blind, and all sorts of other silly names for not agreeing with them, that ironically apply best to them. Scary people, they are indeed!

You can research the world being flat until the cows come home but that won't make it less false.

[thechidz]

In my experiencing of debating various conspiracy theorists, as well as crazy Ron Paul people, I've found that they love to try and take the moral high ground by suggesting I "research" the facts behind all positions of a debate equally. The problem is they throw fits and pout when it all points to "you're wrong" and call you biased, brainwashed, blind, and all sorts of other silly names for not agreeing with them, that ironically apply best to them. Scary people, they are indeed!

You can research the world being flat until the cows come home but that won't make it less false.

I agree with most of what you say exept you should replace Ron Paul with Mcain or something

[dpaanlka]

I agree with most of what you say exept you should replace Ron Paul with Mcain or something

I don't think I've ever heard McCain, Hillary, or anybody's supporters say anything quite at the same level as Ron Paul people. McCain doesn't have quite the die-hard cult-like following as Ron Paul. If you don't know any Ron Paul supporters, then you just don't understand. I live with one. It's scary.

McCain, Obama, and Hillary are actually all secretly on the same team, working tirelessly to end the rising star that is Ron Paul to prevent him from destroying their evil plans for this country. They have meetings and are fairly comprehensive in all this.

These are the same people that texted in their votes after all the debates, then grabbed all the friends and relatives phones and also texted in, making Ron Paul appear to win all the debates. He also has a commanding lead on MySpace and Facebook, and every other outlet that is non-scientific and totally open to duplicates.

The supporters pointed to this as proof that Ron Paul would sweep the nomination, despite all scientific polls showing the exact opposite. Which is how the results turned out. This is due to the giant Jew/Media/NeoCon/Liberal conspiracy against Ron Paul.

Also, Ron Paul must always be referred to by his first and last name.

[Davincij]

In my experiencing of debating various conspiracy theorists, as well as crazy Ron Paul people, I've found that they love to try and take the moral high ground by suggesting I "research" the facts behind all positions of a debate equally. The problem is they throw fits and pout when it all points to "you're wrong" and call you biased, brainwashed, blind, and all sorts of other silly names for not agreeing with them, that ironically apply best to them. Scary people, they are indeed!

You can research the world being flat until the cows come home but that won't make it less false.
Funny I stumbled on this thread again...
:)
So do you still think I'm crazy? Last year I took 2 weeks off work 6 months in advance to watch the financial melt down that occurred in September. Just like my research showed. Instead of asking logical questions and providing stimulating debate you opted to simply name call and ridicule.
Here's a video if you were to busy look at reality...
http://www.pbs.org/wgbh/pages/frontline/meltdown/

Now you 401k is most likely a 201k and if you think Dow 10,000 is good look again the dollar lost 20% of it's value in the last 6 months alone.

Out of work? Home value dropped so you are upside down? Can you pay your mortgage? If any of you are in that position you deserve it.

Oh still think the US will not collapse? Well fine, if you think printing and guaranteeing $23 trillion meaning that all loan paper [preforming or not] is guaranteed by the Fed and the government thus a MBS IS good as cash will not cause hyperinflation, then the Darwin award will eventually be your prize.


http://www.youtube.com/watch?v=kyMDmCY
I hope the bankers continue to gang rape your account, don't worry you will always get your dollars. lol

[aloofman]

No financial collapse has happened yet. It might, but not so far.

[Zombie Acorn]

This is the whole point though isn't it?

The US *has* allowed this to happen. The debt is already there, it's just a matter of when the loans are going to be called in.

The point is that the US is really only "rich" on paper at the moment.

Like a guy in a shiny SUV wearing thousands of dollars worth of bling talking on his iPhone who bought it all on credit. The minute he is asked to start paying it back, he would instantly transform into a poor guy rummaging through the trash, cause the SUV and the bling are not really his, he is borrowing them.

I think you'll find quite a bit of world R&D and innovation comes from the US. We aren't only rich "on paper", we have bright minds and draw some of the best from around the world with our superior college system.



I keep hearing this, but no one says why this is supposed to be the case.

The markets are inter-related, but that doesn't stop country A, B, or C from having it's currency devalued. It happens all the time and could conceivably happen to the US couldn't it? I don't see why not. Such "adjustments" happen in the third world regularly. As well as in some of the East block countries when they joined Europe.

If the currency enters unwanted inflation the fed simply pulls money out of the system by increasing reserve rates or using a few other tools they have. The economy suffers for a bit, but the currency doesn't get shoved into the dirt.


Perhaps I am not being clear when I am using that "collapse" word. I don't mean some kind of post-apocalyptic Mad Max collapse, I mean the currency could easily collapse.

If you have a debt, eventually you have to pay it off right? In some kind of real terms? Something with actual value? The only way to pay off the US debt, would be by raising taxes by a massive amount, or by devaluing the dollar by a similar massive amount.

If China sold it's dollar holdings tomorrow and bought Euros instead, the US would tank in a matter of weeks it seems to me.

It wouldn't be smart for China to sell their dollar holdings tomorrow even if they could find a buyer for all of them. Even if they could I don't see how you conclude this would make the US "tank".

China refusing to buy our currency would come back on them anyways as we would simply print and devalue their investment.

Get a new adviser, he sounds like an idiot.

[MacHipster]

Now you 401k is most likely a 201k and if you think Dow 10,000 is good look again the dollar lost 20% of it's value in the last 6 months alone.


That makes no sense. Do you know what 401k means?

[Eraserhead]

China refusing to buy our currency would come back on them anyways as we would simply print and devalue their investment.

But at the same time you'd destroy your own currency, as no-one else would consider it worth anything either.

[Zombie Acorn]

But at the same time you'd destroy your own currency, as no-one else would consider it worth anything either.

I didn't say it was the right thing to do, I just know that we would do it. Neither side seems to be worried about sound money but we are a long shot from "crumbling".

[Eraserhead]

Neither side seems to be worried about sound money but we are a long shot from "crumbling".

Agreed for now, but if you just printed money that would change.

[NT1440]

We'd nuke everyone else before letting this country collapse entirely.