Apple affected by USA financial collapse?

Discussion in 'Politics, Religion, Social Issues' started by Virgil-TB2, Jan 19, 2008.

  1. Virgil-TB2 macrumors 65816

    Virgil-TB2

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    #1
    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).
     
  2. rdowns macrumors Penryn

    rdowns

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    #2
    Oh please, I'd find another advisor were I you.
     
  3. Rodimus Prime macrumors G4

    Rodimus Prime

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    #3
    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.
     
  4. ucfgrad93 macrumors P6

    ucfgrad93

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    #4
    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.
     
  5. dpaanlka macrumors 601

    dpaanlka

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    #5
    I wouldn't take any advisor that believes nonsense like that too seriously. Now is probably a good time to find a different one.
     
  6. t0mat0 macrumors 603

    t0mat0

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    #6
    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.
     
  7. thechidz macrumors 68000

    thechidz

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    #7
    As much as Canadiens hate the US its not going to change the fact that your economy largely depends on ours
     
  8. Rodimus Prime macrumors G4

    Rodimus Prime

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    #8
    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.
     
  9. MacNut macrumors Core

    MacNut

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    #9
    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.
     
  10. maestrokev macrumors 6502a

    maestrokev

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    #10
    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:
     
  11. thejadedmonkey macrumors 604

    thejadedmonkey

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    #11
    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.
     
  12. Rodimus Prime macrumors G4

    Rodimus Prime

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    #12
    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.
     
  13. SthrnCmfrtr macrumors 6502

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    #13
    *blinks*
     
  14. Virgil-TB2 thread starter macrumors 65816

    Virgil-TB2

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    #14
    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.
     
  15. Virgil-TB2 thread starter macrumors 65816

    Virgil-TB2

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    #15
    I 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.
     
  16. dukebound85 macrumors P6

    dukebound85

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    #16
    if the us went into a recession, apple would be the least of my worries...
     
  17. twoodcc macrumors P6

    twoodcc

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    #17
    yeah, i don't really see what your advisor is thinking
     
  18. Virgil-TB2 thread starter macrumors 65816

    Virgil-TB2

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    #18
    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 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.
     
  19. Rodimus Prime macrumors G4

    Rodimus Prime

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    #19
    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.
     
  20. dukebound85 macrumors P6

    dukebound85

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    #20
    i agree, believing anything else is ignorant
     
  21. Rodimus Prime macrumors G4

    Rodimus Prime

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    #21
    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.
     
  22. elmo151 Guest

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    NYC
    #22
    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
     
  23. kimkrause macrumors newbie

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    Mar 9, 2006
    #23
    poor bastards

    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.......
     
  24. zap2 macrumors 604

    zap2

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    #24
    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.
     
  25. Eraserhead macrumors G4

    Eraserhead

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    #25
    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.
     

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