Social Security reached its tipping point and is in the red, socialized healthcare has been enacted, there are long-term inflationary pressures, and the deficit is huge.
http://money.cnn.com/2010/08/05/news/economy/soci…
Any ideas for shorting the U.S. government?
- US Treasuries, stips, etc.
- Companies that service the government (any specific ones?)
Buy gold with US Dollars. In effect, you are short gold. If US deficit reaches a certain level, the only choices for us will be a default, or full scale war. Neither is good for the world economy. If the US goes down, so goes the rest of the world. You think Europe or Asia could survive if we defaulted? And do you think any other country is more likely to beat the USA in a full scale war. Either way, everything, including the US, is fucked, so you might as well park your money in something that has had value for thousands of years (If you really think the US gov needs to be shorted; I don't think things are this bad, but it is certainly possible)
Gold would be good in either scenario.
u gotta be fucking kidding me. If you are looking to hedge against epic end of the world disaster gold does not do shit for you. Gold is not an investment. It has years when it increases, years when it takes a dump, and many years where it just stagnates.
I don't think you are looking to 'invest' when you are head to head with disaster. that is why gold is perfect in this scenario. gold has been a store of value for millenia; to think that it won't still be in demand in 100 years, 500 years, or 1000 years is arrogance at best and ignorance at worst
Go ahead, if/when the day of reckoning comes, keep your assets in dollars, im sure those will be good. the OP asked what a great way to short the US gov was, and this is the best way to do it. If a country defaults, holding short treasury positions or Sovereign CDS would be worthless. Holding physical gold as an asset is a great way to be dollar short, and to hedge out any risks associated with foreign currencies.
If the US defaults at some point, it means they won't have the money to pay judges, or police officers, or soldiers, the very people that enforce contracts. So if you are short some defense contractor or some other company closely tied to Uncle Sam, yah, you might make money, but you couldn't enforce that contract, so it is useless.
If Uncle Sam defaults, I will be in my basement, sitting on a stack of gold (whatever I could buy), water bottles, some food, and ammunition. I don't think its a scenario any of us want to go through.
How would war be caused by excessive government expenditure? Would it be war with another country or civil war? I am not being an asshole, I am actually serious.
And how would we default?
Agree with above. I know Goldman has CDS's on US Treasuries, but I do not know if there is a way for retail investors to play it. Regardless, right now the USA doesn't look THAT bad. Europe is a mess and China is coming up on a bubble of some sort. Where else are investors going to go for safe, secure and liquid investments? That is the big thing. Yeah, we are in trouble, but so is everyone else.
Plus, lets face it, we could easily just jack up the SSI age, cut benefits and things would be ok for a while. We could also just make the millions of illegal immigrants in this country legal and start raping them with taxes like the rest of Americans.
Here is the huge SSI problem. The program was based on the fact that we had more workers than retired people. Well the population started aging and population growth started slowing down so we got double screwed. By increasing the age and increasing the population we could temporarily re-balance things.
Don't worry, the USA will continue to spend and destroy itself until we finally come to the cliffs edge. When that happens the people in this country will freak out and demand change and the government will happily respond by tripling in size, taking away even more rights and further taxing us into oblivion. The people will be happy because they are lemmings.
AN OUNCE OF PREVENTION IS WORTH A POUND OF CURE
How can this country not see a disaster coming and take simple steps no to avert it. WTF
Just out of curiosity, does anyone on here know how CDS works on US Treasuries? Are US Sovereign CDS denominated in another currency? If the US defaulted on its obligations, wouldn't the dollars used to pay the holders of the protection be useless?
I don't think we have the political will at all to do this. I cannot imagine a single senator or representative to call on his colleagues to raise the age for SSI. Nor can I imagine the constituents of this nation actually wanting this, despite the fact that voters today do want to see the deficit reduced. They just don't want it to affect them.
Personally, I am all for a second stimulus, despite it being very against my own political philosophy. I think a second stimulus, this time actually achieving its objectives (investment in clean energy, rebuilding outdated transportation infrastructure, etc) would put Americans back to work and might bump up GDP growth a point or two each year (right now I think we are going to see a few years of flat growth). And with the ten and 30 year at very low yields,the impact on the deficit would not be as severe.
Just remember, American consumer spending is 17% of WORLD GDP. So if we go down, I think the rest of the ship is going with us.
I'm pretty sure US CDS are USD denominated. So you can be right about the feds defaulting, and get paid back in pieces of monopoly money. Irony.
Something else: The US makes up a large part of total IMF contributions, which would be double irony if the IMF chose to give the federal government some sort of aid package.
It is my personal opinion that if you are looking for a doomsday scenario with a better payout, look for municipal bond defaults before a federal default. They lack printing presses.
I like irony.
call goldman and say you want to buy a product to short the US government, they will find a way to hook you up...lol
You could always sell long dated treasury futures, but I don't think they go out too far. Could use LIBOR as a proxy, Eurodollars go out very far.
Might also consider a TED spread, but if the US defaults, chances are it won't be the only one, and LIBOR would probably spike also... furthermore I'm not sure how many contracts there are.
Wow, ok, lets straighten some shit out.
1) If you think the dollar is going to weaken or you want to hedge against inflation or whatever then you go for gold. Gold ETF's, gold mining stocks, whatever you like. Each react differently then the other.
2) If you think the world is going to go nuts then you want physical gold.
Option #1 is intelligent. Option #2 is moronic. If the world goes to shit you are not going to pull out your little bag of gold coins and buy some bread and be perfectly fine. It is going to be mad max type shit. Go buy a rifle or a handgun and keep your investments in USD. Trust me, things go caveman and I am just going to rob all your gold.
CDS's are USD based. This makes perfectly good sense. A CDS is looking at the probability of default. Not a probability of utter bankruptcy, but the chance that their might be a legal default. This can occur many ways. The US could default one way or another, but still be able to pay things back. Defaulting is a function of covenants, not of being bankrupt (although bankruptcy can be part of the default). The Goldman CDS's are better on a technical default of the USD.
If the USA goes down so does the rest of the world. We are all interconnected. Who is China going to sell to if we go bye bye? Who is going to provide China with all of their Soybeans? Who is going to provide a free and open market for European securities? We have reached the point where no one nation can really stand on its own.
Furthermore, lets call a spade a spade. The USA is broke in part because we have a massive fucking military. A military so God Damn big because we have to protect the whole damn world. Who is going to stop China from taking Taiwan? Who is going to put pressure on Iran (sure as hell not the Europeans! Who would of stopped the war in Bosnia? Who would of stabilized Haiti? Who would of stopped Iraq from invading Kuwait? Who would keep the North Koreans in check?
Yes I realize the USA gets involved in a lot of stuff it shouldn't, but anyone in Europe or the rest of the world would be flat out lying if they said they did not appreciate what the USA does. Europe doesn't need a real military specifically because the world has America. Think of how much money we could save if we didn't need to be as big as we are?
Oh, who has boots on the ground in the Middle East? You know how you keep Opec pumping oil and making things nice and happy for the world? Having US troops going hog wild in 2 ME countries with military bases all over. Trust me, force projection is very real and I have zero doubt that the countries in the ME have their asses puckered tightly with Uncle Sam all up in their face. It is one thing to shut off the pipes and pull an Oil Crisis when the USA is an ocean away. I would like to see anyone in the ME pull that shit now? Yeah, not with troops an hour away.
The USA keeps things humming nicely. The whole world benefits from our massive ass kicking military. Let me be bold, no other nation in the world and possibly the history of the world could of done what we are currently doing.
You know how the USA can balance it's budget. Tax the world for all the benefits we give them.
Thanks for the heads up, I'll make sure to keep a hand gun steady and be on the look out for you in the event of a doomsday scenario. I'm not saying we are going to face that, but if we did, I would be in gold. That is the absolute worst case scenario where the world goes to shit. Its almost not possible, but if the world went to shit, I would want hard assets, not USD assets. Maybe its just me, but yah, having some gold and some water bottles and a shitload of ammunition would probably make me feel a little bit better about living in anarchy.
As for the military, yes, we have the most powerful in the world, hence the reserve currency status. If all out war broke out, I'd put my money on the US (and hence, put my money IN the US, in $ assets). However, being the world's reserve currency allows us to borrow larger amounts of money at lower interest rates relative to our peers. I don't feel like running numbers, but it is possible (at this point) that every dollar spent on the armed forces in the US could save a dollar and x cents on interest payments (Not saying its true but its certainly possible).
Hell, we keep 10% of the world's reserve deposits of gold under the streets of NYC as a 'gesture of goodwill' for foreign central banks. I guess we could always 'borrow' a little from there...
Sorry if this post seemed all over the place... the US budget deficit is an enormous issues (especially when you factor in GSE and SSI obligations) and it has so many factors that its impossible to craft a concise response without writing a thesis on the subject (which I have no intention of doing). Hence I'm all over the place on this one
This is literally not true, particularly with standard CDS. Many european banks trade in EUR denom cds by ISDA convention. Lots of structured finance CDS from the 04-07 era traded in the denomination of the reference asset. Also, the US Sovn. CDS normally trades in EUR. As FXtrader noted, sovereign cds denominated in the currency of the sovereign that they reference is ridiculous. Its the reason UKT CDS trades in USD and not GBP, the protection buyer is paid something close to worthless if their CDS is triggered.
US CDS is denominated in EUR Anthony. buying USD denominated protection against the US Government would be worthless.
If the US were to default and all that were to occur, I think your PNL on shorting the US Government would be the least of your concerns.
@ LIBOR - the gold comment wasn't directed to you. Just skimmed the post and saw a lot of gold bulls. I agree with your points though.
Gold is a bitch though. Deep within the Heath Care Reform Bill is a nice little provision which is pissing gold coin deals off royally.
http://abcnews.go.com/Business/gold-coin-dealers-decry-tax-law/story?id…
This is EXACTLY why there should be a rule against non relevant things being jammed into massive bills. As far as I am concerned this is criminal. Had nothing to do with health care, no one read it, not one congress person read it, complete bullshit.
Fuck the gold man, start buying guns.
Anthony, once again you ignore the possibility of owning both gold and guns which i do. Make no mistake about it, if the above concerns about the sustainability of US debt come to pass gold will indeed go bananas. In another thread u just wrote "index funds are an investors best friend". Over the last decade the "non-investment" of gold has tripled and your stock indices have done nothing. If US CDS actually pays off as people are bantering about above gold would be multiples of where it is now and the S&P would be practically worthless.
As for the original question...US debt is very bad and about to get worse but Japan, the UK, and several peripheral European countries are worse off. If you really believe that US debt sustainability is an issue then it means that these countries are also going to come into question along with many more...I do not believe that this will happen but if it does gold denominated in a basket of currencies such as GBP, USD, EUR, and Yen is a no-brainer. I think that would be the #1 trade on this scenario.
And on the US military...our "kick-ass military" is not helping US sustainability at all. We have multipe wars going on, none of which are particularly succesful, and we are paying trillions of dollars to maintain it. To me the age of the US military policing the World is slowly coming to a close because we can no longer afford it and I say we'll be better off for it.
Definitely agree. We are spending way too much money on a Cold War style military when we simply have no use for it post 1991. The same way that they say money does not bring happiness, power is that equivalent for governments. Highly desired, actively sought, eagerly used... but as with money... a great deal of it doesn't bring success.
A lot of policymakers have been talking recently about this mistake of overextension that "empires" and hegemons often engage in.
Look at the Roman Empire, kick-ass empire throughout most of Europe for 1,400 years falling rapidly in a span of 50 years after barbarian invasions, as well as attacks from Goths and Huns
But also second what Bondarb is saying about how as long as you have a printing press the probability of default is that much smaller... which is part of the reason why some of the countries in the EU (PIIGS) are screwed. Each country has its own government, but under one monetary system...
When I say index funds are an investors best friend I mean because they are diversified, allow for dollar cost averaging, have no maintenance and low fees (Vanguard). You are correct that they have taken a bath.
Guns and gold are fine. What type of gold investment do you own though? Bitch about gold is it has no yield and you are hoping for upside. Not saying that is isn't going to happen, just mentioning some possible negatives.
Yes, I wish we did not have to baby sit the world. Unfortunately we get sucked in. I would love to see some other countries help out, but it seems like it falls on us. The best solution in my mind is to gradually become less dependent on anything coming out of the ME and focus on just a normal military role.
That or tax the world lol.
Oh and the CDS's on treasuries are pretty low. I would imagine as our debt spirals out of control even further they will go up.
I would never buy CDS on an entity that can print money to pay back its debts. The US can never default unless they make a political decision to do so, and I think most governments would find it better to simply print the money to the point of causing a currency crisis as opposed to defaulting. But yes, in the above scenario CDS would certainly blow out even if a default never actually occurs.
Only problem with this for the US is that 50% of our expenses are inflation indexed (this fact comes from a research report from MS' economics team... I can't access it here to post a link). So printing more money would work even less than anticipated
Just out of curiosity, what is the pecking order in the event of a US default? Do we pay our social security obligations before treasury liabilities? Do we pay off short term debt before long term debt? Where do agencies fit in? Anyone have any idea?
Theory: T-bills
Practice: Annex Canada
Buy some gold as a hedge.
ARMS...
I dont think there is a seniority. Pretty sure everything is pari passu.
Buy Yuans. The Chineese will eventually float the currency.
Why would they float it?
If not for the US, China would be running a deficit with the rest of the world. Thus if the US cuts its deficit, it will borrow less, meaning it will buy less abroad, and the Yuan will fall (if it is freely floated)
http://www.uschina.org/statistics/tradetable.html
Furthermore, as we see a middle class consumer arise in China, we will probably see inflation (as we are in India, and as we did in the Us in the 1970's when the baby boomers started buying homes, appliances en masse).
Just my opinion, but its certainly possible that the Yuan might fall once the free float hits full force.
No way the U.S. government will ever default on the debt....its just not possible. The result would either be us being invaded or general war. If we default some shit is gonna go down that results in you not caring about having gold.
That said, I would still buy gold, to guard against inflation. Physical or not it will hold value, but I'm not sure if it's too much of a great investment now. Once the recession is over, yes it will eventually end, gold is gonna get raped. I would buy commodities, or something that ensures a solid product (like food coupons lol) for a certain amount of dolars- be like the main characters in the Black Obelisk, but I would expect gold to lose value in the long run rather than appreciate if its bought now or in the near future (since you're planning for the end of the USD when are you going to sell it? When things are "better" (and lose money) or when things implode. You're speculating that the recession will continue, not planning for Armageddon- thats why physical gold is dumb to invest. If you see the market top, I doubt you can bring a physical tonne of gold and sell it anywhere in time.
Since the first stimulus money is being fantastically??? Funding for studying the effects of cocaine on primates (Getting Monkeys High) or those great $10k highway signs that say "Funded by The American Reinvestment and Recovery Act" and is "Putting America Back to Work." no joke...10k for a single sign.
i guess i didn't make it clear enough in the earlier post... the first stimulus was BS... crap... it sucked... its exactly how you said it was... a waste... the money was spent on things that we did not need or did not create long term job growth
clean energy, improved infrastructure, etc, would actually be useful, since it creates jobs, generates growths, and works to solve other problems (pollution, congestion, etc)
Let me play devils advocate and mention the benefits we get from the military. I commonly hear about the wasted money as if money to the military is just burned at the Pentagon to keep Generals warm. Defense funds go to US companies to produce military weapons. It goes to US soldiers who piss it away on Mustangs. It goes to ensure we can get cheap gas that we all love so much. It goes to ensure the South Koreans can keep pumping out cars and TV's.
It also goes to advance civilian businesses and technology. Many military inventions have become civilian profit generators. While I will agree that spending money on Wars is a waste, spending money on a battle ship produced in America with US components and with US workers is not a complete waste. One could argue that is we were to cut only one of the 3 main black holes in this countries budget (Defense, Welfare and SSI) I would say lets cut Welfare.
I would much rather have a powerful military then an over funded welfare program. Guess I am a hawk.
that reminds me of that show "Tactical to Practical" from the history channel a few years back... i loved that show
You have to be kidding. This is all total nonsense so its hard to know where to start. Cheap gas? Every country in the middle east would love to peacefully sell us gas....after all that is how they make money. When we invade foreign countries it only increases the price of gas. Look at Iraq...they produce less oil then they did under hussein and when u factor in the military costs we are paying far more to access it. If the goal of this war was to get oil we fukked up big time.
S Korea? Please, we still have thousands of troops stationed on the DMZ in S Korea...in Vietnam where we left in defeat we have a full diplomatic and trade relationship with the entire country. Korea where we "won" we have to station all these troops and half the country remains in darkness. So tell me whether our military efforts bought us anything in korea.
As for US soldiers who buy mustangs...good for them, but I hardly think that is a reason to support a trillion dollar military. Perhaps we could find a better way to transfer money to the makers of mustangs.
As long as US is stronger than the other suckers, it's not wise to short US; since you have to buy something to "sell" US.
Europe is in pretty bad shape and China is no way a major player (becoming one though) and cannot be one in immediate future (1~5 years).
Well this quickly got out of hand. In a nutshell, here is how to bet against the US government: - Buy gold - Short Treasuries - Buy US CDS (lol) - Buy various muni CDS - Buy non-USD denominated assets - Short corporations with significant quasi-government backing (major banks, credit ratings agencies, military equipment producers, heavily subsidized agriculture, medicare dependent business models, the list goes on) - I'm sure there are more, I don't really care.
I think the best idea is to buy CDS on state general obligation bonds. As others and myself have said, they don't have a printing press, so they can default (or restructure, which I believe is considered a credit event which can force delivery of a CDS contract, please correct me if I'm wrong). By looking at public finance, tax, property, and employment data, the best shorts will be pretty obvious.
I'm not going to fling shit about gold, but it was the best performing asset class of the last decade. Current macro/monetary actions are likely to drive the price higher. Some people will sit out the entire rally because of their faith in the Federal Reserve to have things under control, others for fear of being labeled a gold bug. Pricing gold in dollars, or any other currency, for the purpose most own it for is a mistake. Think about what that means for a minute.
A few thousand years of pogroms and arbitrary government action have taught us Jews that a pouch of diamonds and a lightly packed suitcase at the door during bad times are much better investments than "physical gold". Cumbersome physical gold ends up stolen by people you trusted or on the bottom of the seafloor.
Of course, the world isn't going to get that bad again. I hope.
http://wiki.answers.com/Q/What_are_societal_benefits_of_military_techno…
Not the best source, but it gives you an idea.
Buy American Act
http://www.google.com/url?sa=t&source=web&cd=6&ved=0CCwQFjAF&url=https%…
All I am saying is I do not think Defense spending is a total waste. It is just like construction on roads and bridges. Government taxes us, takes that money and spends it on stuff that benefits us and creates US jobs. Only difference is the government is spending money on private companies like Boeing, Lockheed Martin, Raytheon, etc. Those companies employ Americans, buy American and pay profits to stock holding Americans.
Top 10 Defense contractors:
Lockheed Martin 140,000 Boeing 159,000 Northrop Grumman 120,000 Raytheon 75,000 General Dynamics 91,000 United Technologies 206,000 Science Applications International Corporation 46,000 Health Net L-3 Communications Holdings Other Major Defense Companies Honeywell Inc. 128,000 Hughes (company profile) Rockwell (company profile) Textron (company profile)
Now that is only the top 10 and I didn't get employment for all, but that is still a lot of American jobs. So this brings us to the Military Industrial complex issue and how tied in our economy is to military spending. I feel as if that is a whole other argument so I will let it be. Whatever the case might be, military spending goes right back into the pockets of Americans who pay taxes and purchase goods and services. Cutting defense budgets means laying off people, hurting profits and reducing growth.
If you want to look at things from a GDP standpoint, an economic stand point, an efficient use of cash standpoint, then you will cut SSI and Welfare 1st and Defense less.
I think we just need to generate some good old-fashioned fear into the minds of people. Maybe that would generate a decent stimulus.
IMHO this is the exact opposite of what we need to do. Fear is driving Americans to save more in a time of economic downturn- opposite fo what we need. They will no doubt spend more during the boom times- so a VAT would be OK then (I'd be for the Fair Tax but w/e). What we need is Americans to recognize what is going on in Washington, get rid of this horrible system of pork spending, and I'd actually be for the line-item veto again (fuck the Supreme Court). It should also be limited to how much residents outside a state can contribute to political campaigns. I know it would probably be unconstitutional but when 70-80% of the money comes from out of state, I find it ridiculous and disingenuous to the people of the state
Also, the idea that a second stimulus would be any better is stupid. Number one, who is to say that the government can allocate the money better than it is now. I mean wasn't Obama gonna do "shovel ready" projects with the first one? Also the idea that deficit spending and more government programs are at all beneficial is not based on real results. WWII....yea look at the data Finally government "projects" seems to always end in failure- the TVA, the Hoover Dam, the list goes on. Every time the government gets involved we somehow are able to miss all targets, spend way too much, and somehow get like 20c on the dollar. Give the money to the people! oh wait...we're too stupid.
Brother, I have finally found you. Where have you been hiding my whole life.
http://www.quantnet.com/efficiency-solve-budget-deficit
Only prob with military spending is no-bid contracts and general government waste. But that leads back to my philosophy of needing to cut spending everywhere- since everything the government touches turns to garbage.
The government has no incentive to spend wisely. Why should they? No one in this country holds them accountable. Everyone shits on Congress, but their Congress person is perfectly fine. Such stupidity.
How can people not see through this shit. Look at Kagen. All the thumping and bitching and grandstanding and poof, she got approved. Bush tried healthcare reform, Bush tried it, Obama finally did it. I mean if you keep forcing something through eventually it will happen.
9/11 happens and people are pissed ---> Government doubles in size
Worst recession in ages ----> expand the government
You can increase taxes, thats fine, lets just increase the taxes on everything around them.
I instinctively want to blame and hate the politicians. In fact I typed something about hating them. I had to stop myself and delete it. It is the people. It is our fault. We allow this shit to happen. We get distracted by minutia and do not realize what is really happening. The government keeps getting bigger, keeps asking for more money and keeps using that money to get larger.
Health care reform = more IRS agents, I am sure healthcare enforcement bureau will be formed, more government control and workers.
With the freedom to win big comes the freedom to lose big. People no longer have the stomach to lose, to accept their decisions. It is always someone else who failed them We spend more and more on schools and it is never enough. More and more rules and regulations and restrictions. No end in sight.
THE END IS NI'GH, f00s...
Now this is a man who understands logic. We've actually created well over one hundred committees, bureaus and other regualtory agencies. These new jobs mean giving more Americans a piece of the pie and making sure the ecomony get's back on feet. The millions of jobs already created by the stimulous package are proof of Keynes' theories in action.
Some people don't want the freedom to lose big and now they don't have to worry. That may mean others will be less successful but it's about makinign things fair for all Americans, not just the wealthy and powerful.
You are your brother's keeper.
This is a puppet who will do whatever his asshole advisers tell him to do. Stop giving this dbag credit he doesn't deserve people! He tries to make his bullshit smell like bananna nut pie. Fuck Him! If I ever see him, I'm gonna kick him in the nuts.
It's kind of amusing to see Barack Obama comment on a thread created by Mitt Romney.
yeah, I actually kind of don't mind the Obama troll. Sad thing is I her actually replies like I think Obama might haha.
ETF play: TBT & TMV for when other countries lose confidence in our ability to pay back debt, thus causing them to sell and push our rates higher.
I've always felt that there was an inverse correlation between the amount of Gold in a man's portfolio and his IQ.
Glad you sat out the rally.
http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximiz…
haha i would love to see your bank statements for the last few years...
My gold allocation has been quite high over the last few years and I couldn't be happier about it...i must have a low IQ...big bank account, but low IQ!
Are you at all associated with or related to Edmundo? Regardless of your response I am damn near convinced you are the same person. And yes this is a good thing.
1) I posted earlier about the level of US employment tied to defense spending. This is what I am relating it to. 2) The USA will always have a standing army. Part of the defense budget goes to paying these soldiers. Their pay gets recycled. This is not war dependent.
3) The Middle East is not a free market economy. Oil companies are state owned. They always sell to the highest bidder? Sure, unless America decides to support Israel too much.
http://en.wikipedia.org/wiki/1973_oil_crisis
I am 100% not saying that the war on terror and the USA occupying 2 countries in the ME is justified by the price of oil. I am saying that no one ever looks at any tertiary benefits.
Iraq is slowly increasing their oil output. They would be much higher if it wasn't for home grown terrorism. Iraqi's are hurting themselves. Oh, we did not buy oil from Iraq before the war so it really doesn't matter to us either way.
South Korea is a lot different than Vietnam.
South Korea GDP - 929 Billion Vietnam - 90 Billion
I am not saying this is 100% attributable to US soldiers, but the fact that the USA keeps North Korea from doing anything stupid sure as hell helps the country prosper. If it was not for our troops being stationed there the whole country would be in darkness.
Bondarb, what else about my above statement do you disagree with? Do you disagree that military technology that was researched and funded by the US government has benefited civilian companies? Do you disagree that the US military has benefited the world (in general). Do you disagree that having a super power such as this country benefits us all by keeping nefarious interests in check?
Do you think Saddam would have stopped at Kuwait if there was no USA? Do you think Korea would be as robust and developed as it is now if the communist north had won? Do you think the USSR would have stopped their war in Afghanistan or not invaded Europe had we sat on our hands?
I am not arguing with you that our defense budget is huge. I agree. I am saying that an argument could be made that out of the 3 largest fixed expenses that this country has the defense budget benefits us more then the other two. That is my point. When people talk about the huge cost of the DoD they are discounting the fact that a lot of that money goes right back into our pockets. I 100% agree that everything should be reduced in order to balance our budget and advert disaster. Just pointing out what I feel is an oversight when people criticize the DoD budget.
Not trying to dispute anything but Iraq oil imports to the US today are 1/3 of what they were pre-war (2001 looks like the high)
http://tonto.eia.doe.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTIMIZ…
Fungible good fail!
Bring out the fail whale!
I definitely am not the same person as edmundo....in fact we have disagreed on alot of threads in the past...
On the topic of thread...
Does military technology benefit the private sector? Sometimes, yes. But those resources that are used to create weapons and fight wars would add much more value to the private sector if they were allocated by the free market instead of by military beurocrats. If you believe at all in the free market then you must agree with that statement. Imagine how much we are losing every day by having hundreds of thousands of dedicated soldiers hanging out on military bases around the World...what would these people have accomplished had they been here? how many businesses would they have created? how many jobs? Now you can balance that against the few advances that we have gotten from military technology. The cost of War is 99% opportunity cost.
On oil, the only reason we didnt buy oil from Iraq before the gulf war was because we had sanctions on Iraq...it had nothing to do with Hussein refusing to sell it to us or marking it up in price. Commerce and trade lead to freedom...War does not.
Korea vs Vietnam...it is ridiculous to just compare GDP sizes and then say that our military has been succesful in Korea. The sizes of the countries and a million other things determine the overall size of an economy. Bottom line is that we left Vietnam in defeat 35 years ago and the country is unified, free, and a great trading partner for the US. In Korea, where we never left, the country is split in two, half of it is run by a military dictator, and millions live in darkness.
A resurrected Friedman. Totally agree on the substantial opportunity cost of Military Expenditure.
Give it time, investments are coming. The Iraqi oil fields are in old and falling apart. A lot of updating needs to be done.
Anthony you have become my favorite poster.
For all you U.S. shorters.....
"Remember, my son, that any man who is a bear on the future of this country will go broke."-J.P. Morgan
If the shit hits the fan, I want acres of arable land. The value of gold lies is that it was viewed as a status symbol, it has high tech applications, and it was often used to make government coins and currencies were pegged to it. Gold was valuable, because the currency of the time was in gold. It is a historical lie to say that gold has been valuable since the dawn of time, however that is the perception, which from a pricing standpoint may be more important.
The idea that Rome fell because it overextended itself is not true. Those same barbarians that defeated Rome in the 5th century, would have gotten their asses kicked by the Roman legions of the 3rd century. Romes fall had multiple causes, and it was not simply over extension.
Gold is a bubble. Over the past few decades we have had cycles. The markets roar and gold stagnates, and then gold roars and the markets stagnate. Its the nature of the beast. Gold will come back down, and the markets will come back up. Open up an economics textbook and you will find this cycle. It really pisses me off when I hear all these gold hawkers shearing the sheep, who believe all this nonsense about gold never being worth zero, so buy now. Yes, buy it at 1500 and then when it comes back below a 1000 and stagnates there, at least you have something that is never worth zero.
The US military is far more valuable then all these bull shit social programs we have that have turned our cities into crime and drug ridden third worlds, where it is not safe to raise a family. This is the legacy of the Great Society.
The military on the other hand keeps our country safe, and keeps the world safe from would be power crazed maniacs. United States Military intervention has been a great force for good in the world. Good must remain vigilant else evil will triumph. Do people forget that we were attacked on 9/11, and that parts of the Muslim world (in my mind most of it) as been at war with us for decades, even if we did not know it. There is nothing that we can do to end it, except defeat them. Concessions only make an aggressor hungry for more concessions, till you have given away everything.
Actually, assuming he said this anytime in the 1920's, anyone who made this bet would have been rewarded quite nicely throughout the 1930's.
The only cycle gold has been in for the past decade is up. Supply/Demand fundamentals as well as global macro events are pointing toward higher highs and higher lows. But I guess when you don't have a leg to stand on, just call everyone a gold bug and laugh as gold nearly doubles from its March 2009 lows.
I could rebut everything you said here about how big government works for foreign projects, but not domestic projects, but the truth is we will never see the same thing on this issue. Our military is a bloated global bureaucracy and every time anyone discusses scaling back military operations, they are met with the usual ad hominem attacks of, "well someone doesn't support the troops, and you hate freedom!".
I am done with this thread. It turned from investment ideas that will pay off if government policies don't work, to a whirlwind of political and militaristic propaganda that questions whether the government is ever wrong. So please, everyone, keep buying 30 year treasuries and never ever take a position on the other side of the Fed or Bank of Japan. And for god sakes, Fannie and Freddie will always be there so keep buying their agency debt too.
Lastly, to Bondarb, all true conservatives before Bush were anti-war, but all true conservatives are still anti-war. The issue is with Republicans who are basically all followers of Irving Kristol, Norman Podhoertz, Robert Kagan, and neoconservative doctrine, which is all glorified Trotskyism anyway. I would go as far back as the founding of the American Enterprise Institute to see where the roots of modern militarism were sown. I'm sure you knew that anyway based on your previous posts, but I figured I would throw it out there.
http://www.nma.org/pdf/gold/his_gold_prices.pdf
seems pretty bullish to me... and this ends at 2008
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