Puerto Rico defaults

#51
#51
SpaceCoastVol said:
Blather if you must, but THE reason that the Russians are eating our lunch is a weak assed president. Nothing more.
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You just worry about keeping your airplanes out of this, will you?

I can't believe I'm having to actually talk with someone so educated about something so simplistic.

What you prove is that this will be a very hard road.

I understand that.

I just hope that you do too.
 
#52
#52
volprof said:
In the big scheme of things, friendo, the Carribbean needs to be maintained as an American lake.

You've taken it for granted that that's the case, but it wasn't always.

But why I'm I even talking to some of you. All you care about is political party/ideology survivability. Not the country's survivability. That's where the Russians whip our asses like a bunch of pathetic dogs, no matter the case. They're committed to national survivability while you're committed to your individual interests.

I dare you to even argue with that.

Actually, you probably will, in a half-**** attempt to save yourself, but I honestly defy any of you on here as far as the country's survivability is concerned. You're mostly just mercenaries. I don't care if you've served in the military or not.

Russians eat your lunch.
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Both parties are guilty of this.
 
#53
#53
volprof said:
You just worry about keeping your airplanes out of this, will you?

I can't believe I'm having to actually talk with someone so educated about something so simplistic.

What you prove is that this will be a very hard road.

I understand that.

I just hope that you do too.
Click to expand...
Dude, seriously. Economically, PR is less important than Greece. Yes, I know what they have done to the world markets which is ludicrous. But they are fiscally unimportant to this country other than some recreational trade. Strategically, you have a bit of a point, but I think there are many other options than you are willing to recognize. I gotta catch a plane, but we can continue this at a later date. Ciao, my Big Orange brothers.
 
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#54
#54
I am wondering at what point do I, and then others, feel like this is part of a systematic failure. Two small countries defaulting does not a panic make. But it has caught my eye, maybe it's because I pay attention to this stuff now.
 
#55
#55
LouderVol said:
I am wondering at what point do I, and then others, feel like this is part of a systematic failure. Two small countries defaulting does not a panic make. But it has caught my eye, maybe it's because I pay attention to this stuff now.
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It is absolutely a systemic failure of the central banking and fractional reserve system. Every monetary unit is created with interest attached therefore, there must be growth to pay the principle plus interest. Even if an economy stayed flat, a country takes on more debt to pay the bills. Almost every country on the planet has reached peak debt.

If you look at the modern history of money this has happened a couple of times. The traditional gold standard, to the modified gold standard, to the Bretton Woods agreement, to the pure fiat we have today. Two of the three transitions resulted in world wars. We're in precarious times right now.
 
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#56
#56
red butler said:
It is absolutely a systemic failure of the central banking and fractional reserve system. Every monetary unit is created with interest attached therefore, there must be growth to pay the principle plus interest. Even if an economy stayed flat, a country takes on more debt to pay the bills. Almost every country on the planet has reached peak debt.

If you look at the modern history of money this has happened a couple of times. The traditional gold standard, to the modified gold standard, to the Bretton Woods agreement, to the pure fiat we have today. Two of the three transitions resulted in world wars. We're in precarious times right now.
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'Tis true. Peak debt is an issue very few people consider or understand. When they create money from nothing, then attach interest to the repayment, there isn't enough money to pay back both the principle and interest. It guarantees all the money eventually goes back to the banks, but it also guarantees that economies will fail.
 
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#57
#57
SpaceCoastVol said:
Dude, seriously. Economically, PR is less important than Greece. Yes, I know what they have done to the world markets which is ludicrous. But they are fiscally unimportant to this country other than some recreational trade. Strategically, you have a bit of a point, but I think there are many other options than you are willing to recognize. I gotta catch a plane, but we can continue this at a later date. Ciao, my Big Orange brothers.
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Yes, you're right about the economics.

Or, are you? Duhn duhn duhn!

Honestly, I don't know, but I appreciate someone at least from ostensibly the opposite side realizing that this is actually an issue. Thank you.

So here's the deal and the challenge:

1. I'm going to campaign amongst my circles for more fiscally sound politicians and policies. No matter how hard it hurts, the way we've been going can clearly not last. This is what we need more of.

2. I'm going to campaign against excess spending.

3. You realize that the Caribbean (and even all our territories there or elsewhere) is not going to remain that congenial forever. So what can you do?

Well,

Clearly, given our fiscal situation on the mainland, we need to devise a strategy with honest intent that can ensure our dominant position there. PR is key, no matter what sort of burden to ensuring that the Caribbean is friendly to us and no outsiders. We take this for granted today, because things have been so easy since the fall of the USSR. But we need US-friendly satellites in the Caribbean, helping us out. The alternative is providing Russia, China, or, god forbid, Iran, with bases here.

If you have any trust whatsoever in my strategic direction (I know this isn't my particular field, but it is one I've basically spent myself in while and since earning my degree in our history and culture), then please pursue these directions.
 
#58
#58
volprof said:
Yes, you're right about the economics.

Or, are you? Duhn duhn duhn!

Honestly, I don't know, but I appreciate someone at least from ostensibly the opposite side realizing that this is actually an issue. Thank you.

So here's the deal and the challenge:

1. I'm going to campaign amongst my circles for more fiscally sound politicians and policies. No matter how hard it hurts, the way we've been going can clearly not last. This is what we need more of.

2. I'm going to campaign against excess spending.

3. You realize that the Caribbean (and even all our territories there or elsewhere) is not going to remain that congenial forever. So what can you do?

Well,

Clearly, given our fiscal situation on the mainland, we need to devise a strategy with honest intent that can ensure our dominant position there. PR is key, no matter what sort of burden to ensuring that the Caribbean is friendly to us and no outsiders. We take this for granted today, because things have been so easy since the fall of the USSR. But we need US-friendly satellites in the Caribbean, helping us out. The alternative is providing Russia, China, or, god forbid, Iran, with bases here.

If you have any trust whatsoever in my strategic direction (I know this isn't my particular field, but it is one I've basically spent myself in while and since earning my degree in our history and culture), then please pursue these directions.
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By the time the banks and hedge funds are done picking the bones of Puerto Rico's public assets at firesale prices, there isn't going to be anything of value for a foreign country to go after.

Now an internal revolt could be a concern.
 
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#59
#59
red butler said:
By the time the banks and hedge funds are done picking the bones of Puerto Rico's public assets at firesale prices, there isn't going to be anything of value for a foreign country to go after.

Now an internal revolt could be a concern.
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That's what I'm thinking. And we don't need that kind of headache with our interests elsewhere.

The greatest thing that made us a world power was our security. We simply didn't have to worry about European or Asian affairs, unless we wanted to.

In the era of globalization, the era of free trade and cheap ****, that is becoming less tenable for us.

We have to worry about these things now.

But here's the rub, and listen to me:

Hardly anyone, if anyone indeed, has written about the state of the Western Hemisphere and its geopolitics without consideration to the hegemony of the Eastern Hemisphere.

The simple reason is that the Western Hemisphere is not as important (politically, historically, materially, etc.) as the Eastern Hemisphere.

This should not be mistaken for weakness. The US needs to do all it can, within its means, to ensure that the Western Hemisphere remains within its dominance.

Given the significance of Eurasia, it's never likely that any outside power will ever be able to dominate the Western Hemisphere, but we don't need to run that risk.

We need the Caribbean, and we need to do it honestly and without force. We don't need a potential Chinese or Russian, or whoever, base in the Western Hemisphere.

This is just one reason why Obama, despite his domestic flaws, has proven a godsend internationally. Opening up to Cuba, and forbidding a potential Russian (maybe even Chinese) base there is so crucial.

Domestic issues may or may not prove kind to Obama, but foreign issues will most certainly vindicate him. He's handled them most excellently, barring a stupid "red line" comment in Syria some years ago.
 
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#60
#60
red butler said:
It is absolutely a systemic failure of the central banking and fractional reserve system. Every monetary unit is created with interest attached therefore, there must be growth to pay the principle plus interest. Even if an economy stayed flat, a country takes on more debt to pay the bills. Almost every country on the planet has reached peak debt.

If you look at the modern history of money this has happened a couple of times. The traditional gold standard, to the modified gold standard, to the Bretton Woods agreement, to the pure fiat we have today. Two of the three transitions resulted in world wars. We're in precarious times right now.
Click to expand...

let me rephrase my statement. I agree that the system is a failure. Is this (Puerto Rico and Greece) happening so soon a sign that we can except the pace of defaulting nations to speed up? you kinda say that with the debt peak comment, but i don't want to put words in your mouth.
 
#62
#62
Wow I am so shocked. Maybe they need to pawn their 1990's honda's and toyota's..maybe open more road side mauvi stands. That will give them that cash injection that they need!
 
#63
#63
red butler said:
By the time the banks and hedge funds are done picking the bones of Puerto Rico's public assets at firesale prices, there isn't going to be anything of value for a foreign country to go after.

Now an internal revolt could be a concern.
Click to expand...

So consider this... This is the system we've been sold.

Banks get to invent money out of thin air, with just the clicks of a keyboard. They loan it out with interest attached. The invention of that money creates a net loss of money-to-debt ratio since they didn't 'create' the money to cover the interest, so we end up with more debt than there is money to pay it back.

This guarantees massive defaults and repressed economies. The only question is who will have a seat when the game of musical-debt stops, and there will be very few chairs.

When it all comes down, the banks get to trade in the debt for real resources, all while having nothing invested in the game, and playing by the rules that guarantee this outcome.
 
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#64
#64
red butler said:
By the time the banks and hedge funds are done picking the bones of Puerto Rico's public assets at firesale prices, there isn't going to be anything of value for a foreign country to go after.

Now an internal revolt could be a concern.
Click to expand...

You obviously don't know any Puerto Rican's from the island :eek:lol:
 
#65
#65
LouderVol said:
let me rephrase my statement. I agree that the system is a failure. Is this (Puerto Rico and Greece) happening so soon a sign that we can except the pace of defaulting nations to speed up? you kinda say that with the debt peak comment, but i don't want to put words in your mouth.
Click to expand...

IMO each country has a different situation so the debt will manifest itself in different ways. Countries with a central bank like the US and Japan can theoretically extend the debt indefinitely. Of course printing tons of money is done at the expense of the value of the currency. So indebted countries that control their currency may only see a steady decline in their standard of living and a widening of wealth inequality.

The heavily indebted EU countries (the PIIGS nations) are really at the mercy of the ECB and Troika to restructure their debt. It's not in the interest of the EU or the Troika to force a default due to the ripple effect it would have on the financial system. I expect those defaults to proceed similar to Greece in the form of "extend and pretend" with austerity mixed in.

Small countries like Puerto Rico are interesting because they're actually in better shape than many of the other countries I've listed. If they owed hundreds of billions, they'd have more leverage. The saying goes if you owe the bank $1M you have a problem, if you owe the bank $100M - the bank has a problem. I'm guessing small countries like Puerto Rico gets a small bailout package to pay off the major financial institutions (while they sell off public assets)... but the regular bondholder takes a near 100% loss.
 
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#66
#66
red butler said:
IMO each country has a different situation so the debt will manifest itself in different ways. Countries with a central bank like the US and Japan can theoretically extend the debt indefinitely. Of course printing tons of money is done at the expense of the value of the currency. So indebted countries that control their currency may only see a steady decline in their standard of living and a widening of wealth inequality.

The heavily indebted EU countries (the PIIGS nations) are really at the mercy of the ECB and Troika to restructure their debt. It's not in the interest of the EU or the Troika to force a default due to the ripple effect it would have on the financial system. I expect those defaults to proceed similar to Greece in the form of "extend and pretend" with austerity mixed in.

Small countries like Puerto Rico are interesting because they're actually in better shape than many of the other countries I've listed. If they owed hundreds of billions, they'd have more leverage. The saying goes if you owe the bank $1M you have a problem, if you owe the bank $100M - the bank has a problem. I'm guessing small countries like Puerto Rico gets a small bailout package to pay off the major financial institutions (while they sell off public assets)... but the regular bondholder takes a near 100% loss.
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great response, i feel like this post should have made me more knowledgeable about the world than it did.

how do you fix it? Get nations to cut spending until they are in the black and start paying off those debts, extending them as needed as long as they are actually paying them off, and not incurring more debt? Force them into austerity to pay off the loans ASAP or within the set time frame? Or just get rid of the lending institution (at the national level) all together and start from scratch? seems like any way you spin it, someone is not going to accept it.
 
#67
#67
Orange_Crush said:
So consider this... This is the system we've been sold.

Banks get to invent money out of thin air, with just the clicks of a keyboard. They loan it out with interest attached. The invention of that money creates a net loss of money-to-debt ratio since they didn't 'create' the money to cover the interest, so we end up with more debt than there is money to pay it back.

This guarantees massive defaults and repressed economies. The only question is who will have a seat when the game of musical-debt stops, and there will be very few chairs.

When it all comes down, the banks get to trade in the debt for real resources, all while having nothing invested in the game, and playing by the rules that guarantee this outcome.
Click to expand...

I'm probably not keeping up with current economic theory, but what is the "money-to-debt ratio"?
 
#68
#68
Abe Hoffman said:
I'm probably not keeping up with current economic theory, but what is the "money-to-debt ratio"?
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I used that as a short-cut to describe the amount of money in an economy, compared to the amount of debt.

Fractional Reserve Banking gives banks the ability to literally create money out of nothing to make a loan. But they don't create the money to pay the interest on that loan. So, on each fractional loan, you create an amount of money that is less than the amount needed to pay off the loan. It's designed-defaults.

So, when people default, the bank gets to take real wealth in trade for the imaginary money they never really had to risk.
 
#69
#69
LouderVol said:
great response, i feel like this post should have made me more knowledgeable about the world than it did.

how do you fix it? Get nations to cut spending until they are in the black and start paying off those debts, extending them as needed as long as they are actually paying them off, and not incurring more debt? Force them into austerity to pay off the loans ASAP or within the set time frame? Or just get rid of the lending institution (at the national level) all together and start from scratch? seems like any way you spin it, someone is not going to accept it.
Click to expand...

I don't know that you can fix it. There are powerful groups that benefit from the way it is now and have a vested interest in the status quo. There are advantages. For instance, finding financing for a new idea is pretty easy compared to when we were on the gold standard. The innovation that occurs during boom cycles is pretty remarkable. I don't know what our standard of living would be like if borrowing costs were determined by the free market.

I don't know how to deal with the current debt, but in general, there are several schools of thought on the best monetary system. I'm not an expert but this is the way I'd break down the schools.

Most mainstream economists nowadays seem to be Keynesians. They believe that the government should increase spending during economic downturns to stimulate the economy. The problem is they never rein in spending during the good years.

The Modern Monetary Theorists (MMT) seem to double down on Keynesianism. I've seen an MMTer state the deficit and debt don't matter because the dollar is the reserve currency and we can always print more. The problem I have with this philosophy is I don't think the rest of the world will trade their goods and labor for our paper indefinitely.

The Austrian school are typically goldbugs. They believe the dollars in circulation should be fixed to a commodity so that it isn't constantly devalued. It could be gold, silver, oil, or even crops (similar to the Edison dollar). Of course we were on the gold standard during the Great Depression, so the gold standard may not be the best. I'm convinced the banks caused the Great Depression; but the inflexibility of the gold standard didn't help when the country was in a credit crunch and banks started failing.

I like the ideas of Milton Friedman from the Chicago school of economics. From what I gather from watching dozens of hours of his debates on youtube, he supported getting rid of the Federal Reserve, increasing capital requirements for banks to near 100%, and having the treasury increase the money supply at a modest rate of inflation.
 
#70
#70
Orange_Crush said:
When it all comes down, the banks get to trade in the debt for real resources, all while having nothing invested in the game, and playing by the rules that guarantee this outcome.
Click to expand...

And sadly... to most people (even on this board), that is OK. You should go to one of the Greek threads and hear them chirp about Greek socialism and defaulting is lazy and all of that...

Not knowing (or possibly even caring) that the US is in no better shape. These will be the same people expecting their SSI checks to be there when they retire, also.
 
#71
#71
volprof said:
In the big scheme of things, friendo, the Carribbean needs to be maintained as an American lake.

You've taken it for granted that that's the case, but it wasn't always.

But why I'm I even talking to some of you. All you care about is political party/ideology survivability. Not the country's survivability. That's where the Russians whip our asses like a bunch of pathetic dogs, no matter the case. They're committed to national survivability while you're committed to your individual interests.

I dare you to even argue with that.

Actually, you probably will, in a half-**** attempt to save yourself, but I honestly defy any of you on here as far as the country's survivability is concerned. You're mostly just mercenaries. I don't care if you've served in the military or not.

Russians eat your lunch.
Click to expand...

Yes! Trey Gowdy for supreme president. Only count votes for Trey. Trey for 10 consecutive terms! Don't care if the elections are rigged!
 
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