# News When the economy collapses

Mentor
cronxeh said:
And France with their meager 60 million population and $35 billion military budget/year is not really a good example. I'd say whatever bad can happen to them will happen 5 fold to the US if we come anywhere near that economic crunching point Certainly it would be worse for us (and the rest of the world), but my point was to get you to look up how near we are to that crunching point in relation to another country like France. Ie: France's debt-to-gdp ratio is 68%. The US's debt-to-gdp ratio is 24%. Yes, that's right - the US's national debt would have to more than double for us to be in the same economic predicament France is in. Art said: The ecomomy began to slip as Clinton's presidency ended because business people in general and foreign investors in particular were worried about the prospect of a republican president given their previous dire record on controlling spending. The same used to happen in Britain when it appeared a labour gov't was in the offing for the same reasons. Yes, I've heard that argument before - extrordinary prescience, that the business community knew 6 months before the election that Gore would lose, yet Gore didn't even know until 3 weeks after the election! The real truth is that Clinton rode the wave of an internet boom he had little to do with. He rode it up and when the bottom fell out (as it was destined to - the market was overvalued), he rode it down part-way, then handed it to Bush to try to pull it out of the death-spiral. In addition, the Clintons were lucky that they were a mediocre President: they attempted, and failed, to pass the largest increase in government spending since Social Security. But since he failed, he gets to claim success! :uhh: Last edited: #### Integral Staff Emeritus Science Advisor Gold Member russ_watters said: Certainly it would be worse for us (and the rest of the world), but my point was to get you to look up how near we are to that crunching point in relation to another country like France. Ie: France's debt-to-gdp ratio is 68%. The US's debt-to-gdp ratio is 24%. Yes, that's right - the US's national debt would have to more than double for us to be in the same economic predicament France is in. Yes, I've heard that argument before - extrordinary prescience, that the business community knew 6 months before the election that Gore would lose, yet Gore didn't even know until 3 weeks after the election! The real truth is that Clinton rode the wave of an internet boom he had little to do with. He rode it up and when the bottom fell out (as it was destined to - the market was overvalued), he rode it down part-way, then handed it to Bush to try to pull it out of the death-spiral. In addition, the Clintons were lucky that they were a mediocre President: they attempted, and failed, to pass the largest increase in government spending since Social Security. But since he failed, he gets to claim success! :uhh: What you say here is pretty much correct. Clinton can not really be given credit for the boom, or blame for the bust. It is an example of how little effect the president actually has on the economy. Unless, of course, they do something completely stupid, like start an unnecessary war. Bush can and should take full blame for the current situation. In a worst case scenario, the Bushes and their good buddy Ronny Raygun will be seen as the beginning of the end of the American civilization. We need to keep in mind that at least 3 generations must pass before the true place in history is know for any event or president. The true effect of Reagan and the Bushes will not be know until the adulthood of our grandchildren. All we can do now is express biased opinions. #### Integral Staff Emeritus Science Advisor Gold Member That last post was not really much on topic of this thread. I apologize. I wonder what level of natural disaster will be required to precipitate the decline and fall of the American economy. Perhaps the possible Richter 9 earthquake in the Pacific Northwest could be the trigger. Just imagine Seattle and San Francisco suddenly below sea level, the entire population of the pacific from San Francisco to The Olympic peninsula homeless. All bridges across the Columbia, gone; the Columbia dams, gone; Portland, gone. Sorry no time to continue, but how could the nation recover from this disaster? #### Art russ_watters said: Yes, I've heard that argument before - extrordinary prescience, that the business community knew 6 months before the election that Gore would lose, yet Gore didn't even know until 3 weeks after the election! Not exactly prescient, just prudent. It's not unusual for people to move out of the market until they see how an event plays out. If you followed the markets even remotely you'd know that. russ_watters said: The real truth is that Clinton rode the wave of an internet boom he had little to do with. He rode it up and when the bottom fell out (as it was destined to - the market was overvalued), he rode it down part-way, then handed it to Bush to try to pull it out of the death-spiral. That's funny I remember you arguing on another thread that the internet boom was only a tiny part of America's economy but now that that no longer fits your arguement it has suddenly become the lynch pin of the economy. At least make an effort to be consistant. BTW isn't it an amazing coincidence that the economy boomed only throughout his term in office. russ_watters said: In addition, the Clintons were lucky that they were a mediocre President: they attempted, and failed, to pass the largest increase in government spending since Social Security. But since he failed, he gets to claim success! :uhh: :rofl: :rofl: :rofl: Sorry but this is just nonsense. Clinton stated from the start he was going to balance the budget, the republicans first tried to stop him by pushing through huge tax decreases for the wealthy which he vetoed (you might remember it closed the gov't down as they tagged them onto the main budget bill). When plan 'A' didn't work they then had the gall to try to make it look like balanced budgets were their idea by trying to push through the balanced budget act. :rofl: They really have no shame. BTW I wonder what happened to that policy after they got their republican president in??????? The current deficit is entirely due to the neocons warmongering and the enormous tax decreases for the wealthy. Bush even boasts about his tax reductions being the largest for over 20 years!! #### Manchot I don't care what anyone's position is on whether Clinton just rode the dot-com bubble or not. (Having said that, I do agree with Integral: the president has very little effect on the economy unless he changes something large, like implementing large tax cuts or going to war.) The truth that cannot be denied is that a) there was a budget surplus when Clinton left office that was going to level our debt, and b) that there is now a sizable budget deficit, mostly due to Bush's tax cuts and war. Instead of tax and spend, we have tax and borrow. Really conservative. Furthermore, our GDP-to-debt ratio in comparison with France's is completely irrelevant. Our economy is magnitudes larger than theirs, and as such, works completely differently. For one thing, the strength of many smaller nations' currencies depends on the strength of our dollar, which means that if confidence is lost in it, it could have a resounding effect throughout the world, multiplying the effect by several fold. At the same time, France has a much lesser effect on the strength of the Euro. #### russ_watters Mentor Integral said: We need to keep in mind that at least 3 generations must pass before the true place in history is know for any event or president. The true effect of Reagan and the Bushes will not be know until the adulthood of our grandchildren. All we can do now is express biased opinions. I've always thought it was 20 years, but then, I'm impatient... That last post was not really much on topic of this thread. I apologize. I wonder what level of natural disaster will be required to precipitate the decline and fall of the American economy. Perhaps the possible Richter 9 earthquake in the Pacific Northwest could be the trigger. Just imagine Seattle and San Francisco suddenly below sea level, the entire population of the pacific from San Francisco to The Olympic peninsula homeless. All bridges across the Columbia, gone; the Columbia dams, gone; Portland, gone. Sorry no time to continue, but how could the nation recover from this disaster? A 9.0 earthquake up there would be rough, but submerge Seattle? I doubt it. I suppose you're talking about a tsunami, but San Francisco is pretty high up for a coastal city - a check off Google Earth shows that half a mile inland, it's 90 feet above sea level. I really think Katrina is about the worst mother nature has to offer for the US. It cost roughly$100 billion. About the only thing worse would be a Cat5 hurricane making landfall in Miami and bisecting Florida.

Art - find that quote, because that doesn't sound like something I'd say. I've always been very consistent in saying that the President has little effect on the economy. Also, do you know what failed policy I was referring to? And uncertainty is one thing, but what the economy did in 2000 was far beyond what uncertainty gives you - especially considering that people had every reason to believe Clintons policies would continue with a Gore win (with the economy riding high, he would have been shoo-in).

#### russ_watters

Mentor
Manchot said:
The truth that cannot be denied is that a) there was a budget surplus when Clinton left office that was going to level our debt,
That is only "true" if you ignore the fact that the economy is cyclical, make unrealistic estimates of it's future gains, and make promises for other Presidents to keep that Clinton wouldn't have kept (that's the best part about promises for when you're already out of office!). In short, such speculation is utterly meaningless.
Furthermore, our GDP-to-debt ratio in comparison with France's is completely irrelevant. Our economy is magnitudes larger than theirs, and as such, works completely differently.
:rofl: :rofl: :rofl: :rofl: It works differently because it's bigger? That's absurd. It works differently because France's government is driving their economy into the ground.
For one thing, the strength of many smaller nations' currencies depends on the strength of our dollar, which means that if confidence is lost in it, it could have a resounding effect throughout the world, multiplying the effect by several fold. [emphasis added]
As you say, that's an effect - that has nothing to do with your assertion that our economy functions differently.
At the same time, France has a much lesser effect on the strength of the Euro.
That's true, but it has the opposite effect that you are implying it has on France's economy: that works to stabilize and strengthen France's economy. So that doesn't support your assertion either: being small should make France's economy more stable and stronger.

#### Archon

russ_watters said:
That is only "true" if you ignore the fact that the economy is cyclical, make unrealistic estimates of it's future gains, and make promises for other Presidents to keep that Clinton wouldn't have kept (that's the best part about promises for when you're already out of office!). In short, such speculation is utterly meaningless.
Ok. Emphasis on "budget surplus" then? Is that better? What do we have now? Please don't tell me you're planning to argue that our current deficits are the result of our cyclical economy. Because to the best of my knowledge, it's also a fact that Bush has cut taxes and drawn us into war. But surely that has nothing to do with it...

And promises like what? Like "I'm not going to drive our country into massive debt?"

:rofl: :rofl: :rofl: :rofl: It works differently because it's bigger?
Umm....yes? Surely you weren't expecting me to say anything different?

That's absurd. It works differently because France's government is driving their economy into the ground.
You could argue that. But on an even more fundamental level, they're different because the U.S. economy is so much larger and more globally important than the French economy.

As you say, that's an effect - that has nothing to do with your assertion that our economy functions differently.
It's an effect that exists because of the fact that our economies function differently.

That's true, but it has the opposite effect that you are implying it has on France's economy: that works to stabilize and strengthen France's economy. So that doesn't support your assertion either: being small should make France's economy more stable and stronger.
Unless I'm mistaken, he's talking about the effect the state of the French economy has on the rest of the world. He's saying that this is small compared to the effect the state of the American economy has on the rest of the world. Naturally, since so much depends on the strength of the dollar, people are unlikely to allow the U.S. to amass a large GDP-to-debt ratio without acting in some way, often with negative effects on the American economy. The high GDP-to-debt ratio in France has a much smaller effect, so people don't care as much. Among other things. But that's one aspect of it.

#### Futobingoro

russ_watters said:
France's debt-to-gdp ratio is 68%.
The US's debt-to-gdp ratio is 24%.
I don't mean to be nitpicky, but the http://www.whitehouse.gov/omb/budget/fy2006/pdf/hist.pdf [Broken] is 65.7% of GDP for 2005. I might be missing some technicality here (public or federal debt), but the gross US debt is 65.7% of GDP.

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#### russ_watters

Mentor
Futobingoro said:
I don't mean to be nitpicky, but the http://www.whitehouse.gov/omb/budget/fy2006/pdf/hist.pdf [Broken] is 65.7% of GDP for 2005. I might be missing some technicality here (public or federal debt), but the gross US debt is 65.7% of GDP.
The technicality is that if you have the money in your own account, it's surplus in another area - so you subtract that from your debt to find your net debt. One column to the right of the one you were looking at..... (actually, my data may have been old - it's 26.5% for 2004).
Archon said:
But on an even more fundamental level, they're different because the U.S. economy is so much larger and more globally important than the French economy.
Could someone at least make an effort to prove that!?!? Just saying it and repeating it doesn't make it true.

Again, (your follow-up points), having a different effect on the world economy does not in any way imply that it functions differently.

Ie, the stat that I listed (debt to gdp) means that France needs to have some of the highest taxes in the developed world to finance it's debt, yet the citizens don't see that money....because it's going to finance the debt. That is a straightforward economic concept that works exactly the same if you are France, the US, or my neighbor Bob Smith who has 3 morgages on his house (caveat: Bob Smith doesn't exist, but the concept is the same for in-debt Americans). There are, of course, differences in how banks treat you if you are an individual or a country, but that doesn't change the fact that the underlying concept that debt reduces your disposable income.

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#### BobG

Homework Helper
Art said:
Some achievements of Bush that spring to mind are;
He declared a war on terror and succeeded in changing a small terrorist network with supporters numbered in the 1000s into a formidable international fighting force with supporters now in the millions and all for the paltry sum of several hundred billion dollars of U.S. tax payers money. Way to go!!
He's managed to undo 40 years of hard work the U.S. spent in building an excellent relationship with europe and all in just a few years. Quite an accomplishment.
He has alienated just about every muslim on the planet.
He's now turning his 'charm' on the Chinese with similar effects.
He has managed to eliminate the Clinton budget supluses and run up a record deficit by handing out trillions of dollars in tax cuts mainly to his already extremely rich friends.
He has increased american debt even further by borrowing every cent used to fight his personal crusade in Iraq for which he lied to the american people to gain their support. (This is in addition to the budget deficit as he hasn't funded this through the budget)
He has introduced torture as a 'repectable' means to glean information.
The list just goes on and on......... of Bush's 'achievements'
Not all of these are good examples.

You're overestimating the number of new terrorists Bush policies have created. The real impact is to move the problem from Chechnya and Afghanistan into Iraq. That's a result that's bad enough in its own right since fighting terrorists in backwater countries is better than fighting terrorists in the heart of the world's oil supply.

The economy is cyclic and has more to do with budget surpluses and deficits than presidential policies. The important thing is what a president does with the money during the surplus periods. Clinton at least had a reasonable plan for putting the money to good use - at least in January 1999:

Clintion '99 State of the Union speech said:
......Third, we must help all Americans, from their first day on the job -- to save, to invest, to create wealth. From its beginning, Americans have supplemented Social Security with private pensions and savings. Yet, today, millions of people retire with little to live on other than Social Security. Americans living longer than ever simply must save more than ever.

Therefore, in addition to saving Social Security and Medicare, I propose a new pension initiative for retirement security in the 21st century. I propose that we use a little over 11 percent of the surplus to establish universal savings accounts -- USA accounts -- to give all Americans the means to save. With these new accounts Americans can invest as they choose and receive funds to match a portion of their savings, with extra help for those least able to save. USA accounts will help all Americans to share in our nation's wealth and to enjoy a more secure retirement. I ask you to support them. (Applause.)

.....Saving Social Security, Medicare, creating USA accounts -- this is the right way to use the surplus. If we do so -- if we do so -- we will still have resources to meet critical needs in education and defense. And I want to point out that this proposal is fiscally sound. Listen to this: If we set aside 60 percent of the surplus for Social Security and 16 percent for Medicare, over the next 15 years, that saving will achieve the lowest level of publicly-held debt since right before World War I, in 1917. (Applause.)
Alas, he was no more successful in the middle of budget surpluses than Bush was six years later in the middle of budget deficits.

I think it is fair to blame Bush for making the deficits worse through an expensive war that has little impact on the overall problem of terrorism and for trashing the American image among Muslims, Europeans, Asians ... well, probably it would be easier to list the few countries whose image of America hasn't been tarnished by Bush.

#### Art

russ_watters said:
The technicality is that if you have the money in your own account, it's surplus in another area - so you subtract that from your debt to find your net debt. One column to the right of the one you were looking at..... (actually, my data may have been old - it's 26.5% for 2004).
Russ the reason why there is a difference between gross debt and nett debt is because the gov't has borrowed from itself. i.e. It has borrowed from monies put away to pay state pensions. This money will have to be repaid just like the rest of the debt or an awful lot of people are in for a nasty surprise when they retire. One of the things Clinton did when he was in power was refund the state pension scheme to safeguard it for the future but that has now been "reborrowed" by Bush.
BTW What did happen to the republicans' balanced budget bill??

#### Art

BobG said:
Not all of these are good examples.
You're overestimating the number of new terrorists Bush policies have created. The real impact is to move the problem from Chechnya and Afghanistan into Iraq. That's a result that's bad enough in its own right since fighting terrorists in backwater countries is better than fighting terrorists in the heart of the world's oil supply.
I didn't mention the number of terrorists I spoke about the number of people who support terrorism as popular support is the key to a terrorist network surviving and I think it is save to say these supporters can now be numbered in the millions.
BobG said:
The economy is cyclic and has more to do with budget surpluses and deficits than presidential policies. The important thing is what a president does with the money during the surplus periods. Clinton at least had a reasonable plan for putting the money to good use - at least in January 1999:
It is the presidents policies that determine whether or not there will be a budget surplus or deficit both directly by weighing income against expenditure and indirectly by creating a favourable environment for business to thrive and a motivation for people to work.
BobG said:
Alas, he was no more successful in the middle of budget surpluses than Bush was six years later in the middle of budget deficits.
I have no idea what you mean by this??
BobG said:
I think it is fair to blame Bush for making the deficits worse through an expensive war that has little impact on the overall problem of terrorism and for trashing the American image among Muslims, Europeans, Asians ... well, probably it would be easier to list the few countries whose image of America hasn't been tarnished by Bush.
The deficit exists because Bush inherited a balanced budget then drastically reduced the state's income through his tax giveaways whilst at the same time increased expenditure massively in other areas such as defence. Deficits don't just happen. They are a result of policy decisions.
He also scared off foreign investment by effectively devaluing the dollar, a tactic that destroys international confidence and is usually seen as an act of desperation in the financial markets.
And again I'd like to emphasise the current deficit doesn't even include the \$100s billions for the Iraq war as that has not been funded through the budget. The money for that has come from congress on separate bills.

#### phcatlantis

cronxeh said:
I wonder who will be the one who survives the collapse of the government and law n order once the Government debt reaches its tipping point?
Why debt? Why not debt-to-GDP?

#### edward

phcatlantis said:
Why debt? Why not debt-to-GDP?
Debt to GDP is no longer the standard indicator that it once was. Much of GDP is based on consumer spending, which previously would have indicated strong factory and industrial growth, however the products being purchased are to a great degee coming from other countries.

Much of the current consumer spending has involved the building boom. And as with all booms it can not maintain itself indefinitely.

Even worse a large portion of consumer spending has been done on credit. Consumer credit debt is at a record high in this country as is the national debt. At the same time, individual savings are dangerously low.

Debt to GDP is fine as a basic indicator, but a much bigger overall picture must be looked at when considering the long term economic outlook. Especially with a large pecentage of the national debt being owed to foreign countries, while the trade deficit with those countries continues to grow.

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#### BobG

Homework Helper
Art said:
BobG said:
The economy is cyclic and has more to do with budget surpluses and deficits than presidential policies. The important thing is what a president does with the money during the surplus periods.
It is the presidents policies that determine whether or not there will be a budget surplus or deficit both directly by weighing income against expenditure and indirectly by creating a favourable environment for business to thrive and a motivation for people to work.
Next year's budget is based on a prediction of next year's economy, which affects how much tax money comes in. Even if the next year's economy could be predicted with better accuracy, having government expenditures fluctuate up and down with the economy wouldn't necessarily be the best policy. In other words, a few years with a budget deficit isn't that bad as long the surplus years are balancing the deficit years. It's better than government policies that lose any semblance in continuity since their funding fluctuates too rapidly.
Art said:
BobG said:
Alas, he was no more successful in the middle of budget surpluses than Bush was six years later in the middle of budget deficits.
I have no idea what you mean by this??
Bush wasn't the first to suggest privatization of Social Security in some form. Because of budget surpluses, Clinton was actually in a better position to accomplish some serious Social Security reforms, but hit the same brick wall Bush did. Even if it makes sense, it's a hard sell, regardless of who's president.
Art said:
The deficit exists because Bush inherited a balanced budget then drastically reduced the state's income through his tax giveaways whilst at the same time increased expenditure massively in other areas such as defence. Deficits don't just happen. They are a result of policy decisions.
With the economy taking a downturn, a reduction in the amount of taxes the government would take in shouldn't have come as a surprise. Without some serious budget cutting, there was going to be a budget deficit. In any event, it's a technicality. Bush pushing through tax cuts and starting an expensive war when budget deficits were already expected is still fiscally irresponsible.

The bottom line is that, without the Iraq war to complicate matters, Bush would rate as about average in his ability to deal with the economy.
Ironically, if the Iraq war weren't complicating matters, Bush probably would have lost re-election. Usually, a president that inherits a good economy is doomed to a single term, regardless of how he handles the economy, since a downturn that brings the economy back into line with long term averages is almost certain to hit at the most inopportune time.

#### X-43D

The key to end poverty for everyone imo is to stop excessive consumerism and to set limits to business monopolies and government power (crony capitalism).

#### cronxeh

Gold Member
X-43D said:
The key to end poverty for everyone imo is to stop excessive consumerism and to set limits to business monopolies and government power (crony capitalism).

In my humble opinion, the key to our survival as a civilization is to conserve our population numbers. In last 50 years our population has increased by 4 BILLION people. People want cars, house(s), spirits, foods, books, and various other commodities nowadays and with this boom of population we are destined to run out of natural resources as well as create a hazardous environment for the future populations.

#### Smasherman

cronxeh said:
In my humble opinion, the key to our survival as a civilization is to conserve our population numbers. In last 50 years our population has increased by 4 BILLION people. People want cars, house(s), spirits, foods, books, and various other commodities nowadays and with this boom of population we are destined to run out of natural resources as well as create a hazardous environment for the future populations.
My knowledge on this subject is sparce, but don't wealthy families tend to have less children? Kind of a brutal cycle if so.

#### cronxeh

Gold Member
Smasherman said:
My knowledge on this subject is sparce, but don't wealthy families tend to have less children? Kind of a brutal cycle if so.
well if you would draw parallel between intelligence and wealth, then I suppose it makes sense

#### TheStatutoryApe

cronxeh said:
well if you would draw parallel between intelligence and wealth, then I suppose it makes sense
Other parallel's you could draw might be; Wealthier people tend to be spoiled and selfcentered don't want to have to deal with children. Wealthier people have better access to birthcontrol and have an easier time with the financial part of getting an abortion. ect..

#### X-43D

Hard work and materialism encourage population growth. Poor people work harder to survive and therefore need more children. Only post-materialism can result in liberty and happiness for all.

#### edward

X-43D said:
Hard work and materialism encourage population growth. Poor people work harder to survive and therefore need more children. Only post-materialism can result in liberty and happiness for all.
Ironically we may have to have an economic collapse in order for a post-materialism era to happen.

#### Phrak

I wonder who will be the one who survives the collapse of the government and law n order once the Government debt reaches its tipping point? With raising national debt to both domestic and foreign entities,
the US Government will start printing more money and the inflation will take place. ...
You are 8 years behind.

After the tech wreck came the housing bubble. Someone who can answer as to why this occured has at least some credibility in predicting the future economy.

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