Another interesting email from my buddy

[Mainecoons]

This guy always sends me interesting and thought provoking stuff. You may not agree, and sometimes I don't, but he does think outside of the box and that makes for interesting reads:


Everybody wants to know what will happen in the future. I don't have a crystal ball, but I do have a history book.

The train went off the tracks years ago. It is plunging into a ravine and the only question is when it will hit bottom and what will happen as it crashes.

Thi9s is not going to be a James Bond movie where James drives the car down the mountainside, misses all the trees and ends up on the road at the bottom. This is going to be a real crash. When it is over, you are not going to be able to even find the engine. It doesn't matter who is driving, they are not going to get the train back on the tracks without a crash. Obama, Romney, it doesn't matter.

There are several senerios that come from history:

1. A slow speed crash. That is what is happening in Japan. The US just keeps borrowing money until no one will buy more. The economy slowly sinks until a full depression is in effect. The US defaults on its debt, bit by bit. The voters change the politicians regularly trying to find a savior. (In Japan, they have changed the finance minister about every 6 months). Eventually, the US does like Russia in 1990. They just all give up, change the form of government with little or no bloodshed.

2. A high speed crash. The banking system collapses. Banks close, ATMs don't work. Riots in the street. Government checks don't get cut. This is the Greek senerio. This may happen over a year or less. If this happens, people will die in the street. The US may break up and go into civil war like Syria.

3. Something in between. The government struggles along for a few years and then the banking system fails. SS, Medicare, welfare checks get cut back. This is probably the senerio that works best. Riots will break out and people will die. The government will hold on as long as possible but will eventually fail.

The US is in a box. It can't raise taxes or cut spending without causing a depression. It can't balance it's budget without doing both and it can't borrow forever either.

The US owes $16T that it can never pay back and it has nothing to sell to pay the bill either. The interest rates are at historic lows and it is still costing $500B a year in interest. If interest rates just go back to the long term norm, you are looking at $1T a year in interest. Since total tax collections are only $2.6T a year, that would be 40% of the taxes.

It is obvious to me that the government sees this coming and is taking steps to keep itself in business. It will fail.

The numbers are all in favor of the people. There are 306MM people in the US. Drop out the kids and the old people and you still have 200MM+ people to control. The total government employment at all levels is 22MM, 2MM are military.

When you get down to it, the military is not going to play a role in any uprising. The military may end up being in charge, but they are not going to fire on American citizens. That leaves about 20MM government employees. You can toss 75% of them as being untrained in combat.

The US has been at war forever. Over 2MM people were in combat in Vietnam alone. You can add another 2MM from various other conflicts. They all know which end of the gun the bullets come out of. A lot of them are heavy combat trained. If the TSA and HLS think they are a match, they are wrong.

My guess would be that the government tries to confiscate guns at some point. That may be the spark.

In Turnisia, a fruit vendor set himself on fire and a week later, the whole country was on fire. Try confiscating guns and someone will get shot and it may be on.

Sometime in the next decade, the US government is going to fail and something else will take its place. I have no idea what. The US will quit being a superpower and become an ordinary nation. It will follow the other "empires". Nothing lasts forever........

Anyone who studies history and understands that it tends to repeat cannot uncritically embrace the idea that somehow the U.S. is different and is going to escape the fate of all empires/super powers. Certainly, there's nothing in ancient history to support this view and nothing in contemporary history either. Ask the Russians or the British.

In any case, enjoy or not.

[Carygrant]

What a plonker
Do you write for fun or as therapy ?
Simple questions and simple answers for simple souls .

[Mainecoons]

I didn't write it. Funny, I get the impression that you share many of his sentiments.

[Agravan]

What a plonker
Do you write for fun or as therapy ?
Simple questions and simple answers for simple souls .
Sometimes the simple answers are the right ones.

[Captain Obvious]

You sure get a lot of email.

[Goldie Locks]

Americans have lost 40% of their wealth in less than 4 years.

[Captain Obvious]

Is that the only stat you know?

[Goldie Locks]

Is that the only stat you know?

No!!!...LOL

[Mainecoons]

You sure get a lot of email.

I do! :rofl:

[Aristophanes]

Very interesting. Thanks for sharing.

[Carygrant]

Americans have lost 40% of their wealth in less than 4 years.


At least it shows how stupid some people are .
Carelessness is not an excuse .

[Mainecoons]

You really don't understand that statistic at all, do you?

My buddy waxes philosophical on weekends. Don't know what he waxes during the week. :grin:

Another interesting musing:



One of my great pleasures in life is eating breakfast at Salvadors. The food is marginal, the service is fair but the conversation is excellant.

The subject this morning was world unemployment. We only discuss big problems.

We were looking at Salvadors. Salvadors is a balanced operation. Poncho, the owner, has just enough people to take care of his customers. A few years ago, you had to be there early just to get a table and there were several more waiters. Business has dropped off so, he let a few waiters go.

Poncho could go build a bigger restaurant and hire more people, but that won't fix the customer problem. Poncho can't manufacture customers. So low interest rates are not going to make Poncho expand. Customers are the key, or more importantly, customers that have the money to eat at Salvadors is the key.

If you look at the world, it basically works just like Salvadors. Where there is an unfulfilled need, companies expand. When the demand drops off, they shrink.

In the US, the average families discretionary income has dropped $4000+ over the past decade in real dollars so the demand has dropped in the US. Same in most of the developed countries. This has resulted in high unemployment. The cure is to get the discretionary spending back up.

We were looking at how all this would shake out and we think that the standard of living has to drop. As my German buddy said "Because that is the only thing that can happen".

Then we got over into defining "standard of living". It seems to me that "standard of living" is a moving target. The only way that you can compare standard of living is to the past. It is not a measure of happiness.

I read a story recently about some hot shot trader that lost his job in the Lehman Bros collapse. He had been making an 8 figure salary. He left NYC and moved to the country side and bought a small cottage on a few acres of land. Now, he is lucky to make $10,000 a year and seems to be perfectly content. Did his standard of living go up or down?

Apple is the largest company by net worth based on share price. If Apple folded tomorrow, would it be missed? I, personally don't own or buy anything from Apple and I really don't miss it.

My German buddies theory is that the "standard of living" will slowly sink over a long period of time just like it rose over a long period of time. He is probably right.

I've been sitting here trying to decide just what a lowering in the standard of living would do to the civilization. I'm not sure that it would be all that bad.

I grew up in a small house, no air conditioning. One parent worked, one stayed home. We ate almost exclusively at home. One car, one TV, one phone, A fairly typical middle class life in the 50s. When I got married, I lived in a cheap apartment with cheap furniture. Over time, the apartments got bigger and the furniture better. The cars got better. Eventually, I bought a house and upgraded the cars and furniture more. The toys got better and bigger and more numerous. But I worked more and so did my wife. Was this really an increase in my "standard of living"?.

The last house that I owned was twice the size of the one I grew up in. I had 3 TVs and a phone in every room. And I was the only one living there. There was a new car in the driveway because the garage was full of toys.

Now, I live here on 40% of what it cost in the US. Has my "standard of living" dropped? Doesn't seem to have dropped. I still have enough to do whatever I want to do.

For the longest time, I've thought that a drop in the standard of living would cause social unrest. If the drop is sudden and severe, I still think that will happen. But, if it is gradual and spread over decades, it may not have any social consequences.

One thing that will happen is that government will have to shrink also. When a household has 2 wage earners, almost everything of the second salary goes to taxes. Change that to a single earner and almost no taxes are paid. 50% of all workers now effectively pay no taxes and that percentage will go up.

This will not just be the federal government, but state and local also. A two income household that can afford a huge house and $10,000 in propety taxes a year will not be able to do that on one income. The house size will shrink and high tax areas will find themselves without taxpayers. These areas will have to cut taxes to attract people or they will go broke.

To add to all this, 10,000 people per day are retiring. This will go on for the next 15 years. All these people will be downsizing also. That's 1% of the people yearly. With a lower birthrate and longer lives, the proportion of the population actually working is shrinking.

For at least the last 6 decades, Americans and others have expected their children to "have a better standard of living" than their parents. It has been measured in disposable income. What happens if that doesn't happen?

What happens if 2070 looks more like 1950 than 2010?

In 1900, Argentina was the powerhouse of the Americas. Today, most people can't find Argentina on a map. They had a big run up and fall off. Over the centuries, Spain, Holland, Sweden, Russia and a handful of others have peaked and decayed. At one point, Spain was one of the greatest powers on earth. Today it is begging for money because it is broke.

In 1999, I paid more than 40K in federal taxes. That was the year that I quit. For the next 8 years, I lived on less than 40K and paid almost nothing in taxes. From 2008 until now, I've lived on less than 20K and paid nothing in taxes.

Looking at that, you might think that my standard of living had dropped substantially. Doesn't seem that way to me, it seems about the same.

If you stand back and look at all this, you can see that a decrease in living standards in the US is a much better bet than greater growth.

I just watched a political ad. Basically it says that Obama wants the US to shrink, Romney wants it to grow. I don't think that either one has any control over what is happening. No matter who wins, the trend is in. The first politicos that understand what is happening will be the long term winners. The ones that promise more growth will get killed when it doesn't happen.

The people that realize what is happening and get ahead of it will be the ones that make the money. Smaller houses, smaller cars, planned communities where you can walk everywhere will all come out ahead. People betting on continued high growth will be the losers.

Ajijic is a pretty good example of what might develop. Pave the streets, fix the sidewalks and put in good water and sewer and you have a great example of a self sufficient community. The US would never allow it now just on zoning, but there is no zoning here so it has developed to fit the needs of the community. Things that work stay, things that don't work disappear.

[Goldie Locks]

You really don't understand that statistic at all, do you?

My buddy waxes philosophical on weekends. Don't know what he waxes during the week. :grin:

Another interesting musing:


Not sure i agree with all of that and I can certainly understand getting by on less. We ourselves have gone from nearly 200K a year to about 50K and we are OK, but by no means have enough to do some of the things we'd like. Although we have quite a bit of medical bills. If this person is living on less than 20K a year, he must not do much except go to Salvador's for breakfast. He must have no debt, little bills and no hobbies.

[MMC]

I agree with some of that on Planned Communities. Scaling back down going with local markets and buisness. Even some of those Apocalyptic Peeps and College professors were looking at the different ways disasters may come along. Were in Agreement as things get worse financially that going with safeguarded Communties and local markets would take place. No more cost for hauling shit across the Country. Lowering taxes and some communities creating their own money.

Like in MasterchooseIts and upstate NY with those Berkshire Dollars. People going back to trade with things they need as opposed to desires.