Is The USA Economy Important for Ireland?

rumour

For those who don't know this guy
http://en.wikipedia.org/wiki/Martin_D._Weiss
U.S. Recovery: R.I.P.
What to do now ...
by Martin D. Weiss, Ph.D.
22nd August 2010

QUOTE]If you've been unsure about which way to turn, the latest events should have cleared up any lingering doubts.
Until a short while ago, although most Americans sensed — intuitively or personally — that something was amiss, they couldn't be sure.
We had a semblance of recovery in the U.S. economy. The stock market was going up. And the Washington PR machine was working overtime to persuade us that "everything's OK."
So I can understand how this dichotomy — between what you feel and what they're saying — could have created some confusion.
Now, however, that uncertainty is over, done, finished.
Heck, even during the recent "recovery" phase, we knew that the economy was running on just two cylinders: Government stimulus and some manufacturing. But now, those two are ALSO grinding to a halt:
First, consider manufacturing: The Philadelphia Fed's manufacturing index just plunged 7.7 percent! That's not just a slowdown in production growth. For the first time in more than a year, U.S. factory output is actually shrinking!
Second, government stimulus: Federal money is running out, and no more stimulus is forthcoming. Meanwhile, cities and states are swimming in so much red ink, many are shutting down schools, fire stations and entire police divisions.
The laid off workers are in shock. They thought their government jobs were secure. They never dreamed they'd find themselves on the unemployment lines.
Most economists are equally shocked. They had no clue that unemployment would surge at this stage in the "recovery."
Case in point: Last week, among the 42 economists surveyed by Bloomberg, not ONE predicted a large increase in new claims for jobless benefits. In fact, week after week, most of the "experts" have been putting out projections that the new claims were about to decline.
Instead, just the opposite has been happening! And last week, jobless claims surged again — this time to 500,000, the worst in nine months.
In other words, in addition to the millions of unemployed that have STILL not found jobs — even a year or more after the last big dip in the economy — a whole NEW crop of laid off workers are now flooding the government's unemployment offices.
Those same economists also said personal bankruptcies were going to go down. Wrong again! Bankruptcies are now surging by as much as 9 percent every three months. That's an annualized increase of 36 percent per year!
In fact, the last time we saw a plague of bankruptcies this big was in 2005 when hundreds of thousands hurriedly filed before the new, stricter bankruptcy laws went into effect.
What to Do Now
First, move most of your money to safe, short-term cash parking places. Yes, I know — the yields stink. But in a sinking economy, the return OF your money is far more important than the return ON your money.
Second, don't assume that every bank is safe or that the government can fully bail you out no matter how many banks may fail. Do business strictly with banks that have the resources to survive bad times even without government aid.[/QUOTE]

Is our recovery going to be affected?

liammur

rumour wrote: »

For those who don't know this guy
http://en.wikipedia.org/wiki/Martin_D._Weiss
U.S. Recovery: R.I.P.
What to do now ...
by Martin D. Weiss, Ph.D.
22nd August 2010

QUOTE]If you've been unsure about which way to turn, the latest events should have cleared up any lingering doubts.
Until a short while ago, although most Americans sensed — intuitively or personally — that something was amiss, they couldn't be sure.
We had a semblance of recovery in the U.S. economy. The stock market was going up. And the Washington PR machine was working overtime to persuade us that "everything's OK."
So I can understand how this dichotomy — between what you feel and what they're saying — could have created some confusion.
Now, however, that uncertainty is over, done, finished.
Heck, even during the recent "recovery" phase, we knew that the economy was running on just two cylinders: Government stimulus and some manufacturing. But now, those two are ALSO grinding to a halt:
First, consider manufacturing: The Philadelphia Fed's manufacturing index just plunged 7.7 percent! That's not just a slowdown in production growth. For the first time in more than a year, U.S. factory output is actually shrinking!
Second, government stimulus: Federal money is running out, and no more stimulus is forthcoming. Meanwhile, cities and states are swimming in so much red ink, many are shutting down schools, fire stations and entire police divisions.
The laid off workers are in shock. They thought their government jobs were secure. They never dreamed they'd find themselves on the unemployment lines.
Most economists are equally shocked. They had no clue that unemployment would surge at this stage in the "recovery."
Case in point: Last week, among the 42 economists surveyed by Bloomberg, not ONE predicted a large increase in new claims for jobless benefits. In fact, week after week, most of the "experts" have been putting out projections that the new claims were about to decline.
Instead, just the opposite has been happening! And last week, jobless claims surged again — this time to 500,000, the worst in nine months.
In other words, in addition to the millions of unemployed that have STILL not found jobs — even a year or more after the last big dip in the economy — a whole NEW crop of laid off workers are now flooding the government's unemployment offices.
Those same economists also said personal bankruptcies were going to go down. Wrong again! Bankruptcies are now surging by as much as 9 percent every three months. That's an annualized increase of 36 percent per year!
In fact, the last time we saw a plague of bankruptcies this big was in 2005 when hundreds of thousands hurriedly filed before the new, stricter bankruptcy laws went into effect.
What to Do Now
First, move most of your money to safe, short-term cash parking places. Yes, I know — the yields stink. But in a sinking economy, the return OF your money is far more important than the return ON your money.
Second, don't assume that every bank is safe or that the government can fully bail you out no matter how many banks may fail. Do business strictly with banks that have the resources to survive bad times even without government aid.

Is our recovery going to be affected?[/QUOTE]

It's not as important as the wannabe economists are making it out to be.

rumour

I really don't know the answer. Mr. Weiss historically has generally been spot on. Not a nobel winner but generally spot on so if their economy collapses there is no real threat to the irish economy?

liammur

Our recovery? What recovery!

I believe the US economy is in a fragile state, as are most western economies. Those with debt will be penalised the most.

ei.sdraob

liammur wrote: »

Our recovery? What recovery!

I believe the US economy is in a fragile state, as are most western economies. Those with debt will be penalised the most.

Those in debt in US can walk away much easier, hence their property crash is more or less over by now (tho there are other deeper fundamental issues hovering about like bad smells), if we didnt have NAMA and more lenient personal bankruptcy laws we might have hit the bottom already (wherever that lies!) and truly "turned a corner"

I was in US last week, now in Portugal and was in UK and Spain few months back, in all cases one thing I noticed is the Irish obsession with this crisis (yeh speak for myself )
In all these countries people have moved on and so have the economies

Then again our mess is relatively much larger and tragic, so no surprises i suppose

hinault

ei.sdraob wrote: »

Those in debt in US can walk away much easier, hence their property crash is more or less over by now (tho there are other deeper fundamental issues hovering about like bad smells), if we didnt have NAMA and more lenient personal bankruptcy laws we might have hit the bottom already (wherever that lies!) and truly "turned a corner"

I was in US last week, now in Portugal and was in UK and Spain few months back, in all cases one thing I noticed is the Irish obsession with this crisis (yeh speak for myself )
In all these countries people have moved on and so have the economies

Then again our mess is relatively much larger and tragic, so no surprises i suppose

Just want to take you up on this point above.

I have a lot of business contacts in France (Toulouse and Paris) and Germany (Koln, Munich and Stuttgart) and London.

I speak to these people practically each week and meet with them every six weeks or so.

In each case, it is apparent that their respective countries are weathering the storms far better than us.
Each of them told me at the time (in 2008/9) that there countries were in the manure.
Today, I hear a completely different story from them : they're either out of recession and growing (like Germany) or they're well on the way to recovery.

It is refreshing to hear positivity because there is little or none here (and I include myself in that boat).

Incidentally my brother in law was in Lisbon last week.
He went for a cup of coffee on Lisbon's main thoroughfare and paid €0.85.
I paid 2 quid for a cup of tea in Thomas St Dublin 8 today!

Brussels Sprout

rumour wrote: »

For those who don't know this guy....


....Is our recovery going to be affected?

It's a bit alarming that the stimulus package hasn't seemed to help matters.

liammur

Some good posts on this thread. Makes for a pleasant change from some of the thrash I was reading on a few others re greens etc.

Scarab80

liammur wrote: »

It's not as important as the wannabe economists are making it out to be.

Irish 10 Year v Dow, pretty important looking to me.

maninasia

ei.sdraob wrote: »

Those in debt in US can walk away much easier, hence their property crash is more or less over by now (tho there are other deeper fundamental issues hovering about like bad smells), if we didnt have NAMA and more lenient personal bankruptcy laws we might have hit the bottom already (wherever that lies!) and truly "turned a corner"

I was in US last week, now in Portugal and was in UK and Spain few months back, in all cases one thing I noticed is the Irish obsession with this crisis (yeh speak for myself )
In all these countries people have moved on and so have the economies

Then again our mess is relatively much larger and tragic, so no surprises i suppose

You are wrong about the property crash being over in the US, there is a new tranch of loans coming due in 2010 and 2011, not subprime but piles of steaming turd all the same! This on top of their jobs crisis will mean their economy is in a bad state for another few years. Don't rule out the US over the long-run but they have a lot of issues to work through.

http://www.marketoracle.co.uk/Article16317.html


It has to be said though that most of the world has moved past the crisis and for some parts it was really only the guts of a year, Asia is doing very well at the moment. Ireland had a massive bubble from local causes which was going to bust global crisis or no crisis.

rumour

liammur wrote: »

Our recovery? What recovery!

:rolleyes: Was i being facetious??

rumour

Brussels Sprout wrote: »

It's a bit alarming that the stimulus package hasn't seemed to help matters.

Yes, that has major implications.

BTW Mr Weiss is the only person in the last five years who pointed out that the ratings agencies were not doing their job.

They took him to court and lost.

Now the USA government have reinstated his liscence and asked him to be an advisor. There is however another effect the ratings agencies are now trying to be extra prudent at least for the media. I say that as conflicts of interest are so obvious in their mode of operation.

They are under pressure to downgrade, so beware weak nations.

liammur

rumour wrote: »

:rolleyes: Was i being facetious??

No. However, many people do believe we have a strong recovery underway, none more so than our finance minister. This is simply a myth.

rumour

Well I agree our recovery is fiction. Also for an example of how the USA economy influences ireland although I suspect you know.

http://www.independent.ie/business/irish/crh-shares-fall-17pc-after-giant-warns-of-us-problems-2310215.html

Mr Weiss has been warning about this for some months now. The reason I brought up this thread is exemplified today. A problem that has been brewing for months and is causing capital to flow east in vast sums is only being explained in the general news for the Irish public today.

Even at that few will understand or even contemplate the connections until we are deeper in the mire.

So it further highlights the need not to rely on our media to be up to date and to cast a cold eye on what our government says.

liammur

There is no doubt that the US economy is important to Ireland, but do people realise Irish companies employ over 75,000 people in the US ? These things usually work both ways. The big difference is we have allowed ourselves become complacent and forget about our own industries while attempting to attract MNC's.

rumour

liammur wrote: »

There is no doubt that the US economy is important to Ireland, but do people realise Irish companies employ over 75,000 people in the US ? These things usually work both ways. The big difference is we have allowed ourselves become complacent and forget about our own industries while attempting to attract MNC's.

Completely agree.

maninasia

rumour wrote: »

Well I agree our recovery is fiction. Also for an example of how the USA economy influences ireland although I suspect you know.

http://www.independent.ie/business/irish/crh-shares-fall-17pc-after-giant-warns-of-us-problems-2310215.html

Mr Weiss has been warning about this for some months now. The reason I brought up this thread is exemplified today. A problem that has been brewing for months and is causing capital to flow east in vast sums is only being explained in the general news for the Irish public today.

Even at that few will understand or even contemplate the connections until we are deeper in the mire.

So it further highlights the need not to rely on our media to be up to date and to cast a cold eye on what our government says.

The problem is they didn't diversify their investments, then come up with 'it's tough to make money in that part of the world' comment from the CEO. Yeah it was easy to make money for a few years in Ireland and the US, you just got a loan, somebody else got a bigger loan and bought the stuff that you bought with your loan... look where it got you now you monkey!

Any good businessmen should have seen Asia is the future and been in there already, at least it would have balanced their risk worldwide.

rumour

I've been following this for a while,what are China going to do with their currency. Well I was watching the YUAN and reading what I could about it. I didn't see the link with the RENMINBI, this is muscle flexing. Something the Irish media don't even comphrehend.

http://joongangdaily.joins.com/article/view.asp?aid=2925118

http://dealbook.blogs.nytimes.com/2010/08/24/tpg-to-create-2nd-currency-fund-with-chongqing/

http://www.ft.com/cms/s/0/f00f6a22-b154-11df-b899-00144feabdc0.html

http://www.ft.com/cms/s/0/182a2b70-b130-11df-b899-00144feabdc0.html

The support this is getting from the worlds biggest banks is impressive. After causing havoc in the western world they've pinned nearly all governments to debt and move their operations to China.

HSBC Chief Executive moving from London to Hong Kong.

maninasia

HSBC was founded in China. A lot of it's operations are still out that way (I believe) so it makes sense to return to where the growth is and capitalise on that.

Investing in Renminbi is attractive from a number of viewpoints. China is where the growth should be, China is more stable (so far) than Western countries and the Renminbi is highly likely to appreciate in the medium to long-term. The stock market has been down in China until recently and that probably has a way to go, finally China is starting to open up to foreign financial investors bringing a further flood of hot money into the market..a bubble on the make.

Riddle101

Of course the US economy is important to Ireland. It's just as important as any EU country to be honest. Ireland has a lot invested in USA, as i'm sure USA has with Ireland. But i'm also of the belief that there are other countries whose economies are important to us too, like China and Britain etc

realitykeeper

This month, the US government will increase it`s debt ceiling again. It is doing this at a time when the FED is increasing interest rates. How will this be interpreted by the markets? We are living in very interesting times for the US dollar and by extension, the world. The "Triffin dilemma" is basically a darned if it does and darned if it doesn`t scenario for both the USA and the world. Here is a better explanation:

Triffin's Dilemma

If U.S. deficits continue, a steady stream of dollars would continue to fuel world economic growth, thay would otherwise stagnate due to lack of liquidity. However, excessive U.S. deficits (dollar glut) would erode confidence in the value of the U.S. dollar. Without confidence in the dollar, it would no longer be accepted as the world's reserve currency. The fixed exchange rate system could break down, leading to instability.

Triffin's Solution

Triffin proposed the creation of new reserve units. These units would not depend on gold or currencies, but would add to the world's total liquidity. Creating such a new reserve would allow the United States to reduce its balance of payments deficits, while still allowing for global economic expansion.

From what I understand, the WEF is behind efforts to formulate some sort of new reserve unit. It will probably be made up of a number of major currencies but it is hard to see it working without including the Yuan and the rubble. Or, perhaps it will just be some made up currency with nothing backing it (as in Triffin`s solution). Triffin`s dilemma was identified in 1960. Now in 2023, I think it is finally coming to a head. After the FED lowered interest rates to zero, it had a problem because zero being zero means you cannot easily go lower, so the interest rates had to start going up. At first, this strenghtened the US dollar against the Euro (and other currencies). Now the Euro is strenghening vs the dollar because the ECB has also started raising rates.

A strong US dollar to the Euro, is good for Ireland. In 2020, 29% of Irish exports went to the US. Our exports to the US would decrease if the US dollar weakens significantly against the Euro. That could lead to job losses here. Given that the FED is likely to pivot from interest rate rises to interest rate cuts before the ECB pivots, the US dollar is falling against the Euro in anticipation of this, (buy the rumour, sell the fact). If I am right, and this trend continues until the US Fed pivots, companies here that export to the US will begin to feel the squeeze.

But, when the FED does pivot, all hell could break loose. They might be trying to hold out until the end of LIBOR in June but they will find it difficult because the US economy may convulse before then.

Sometimes fear is a healthy thing and now is one of those times. I recommend people start growing their own vegetables.

quokula

https://www.boards.ie/discussion/comment/120116730#Comment_120116730

Raising the debt ceiling is a formality in the US, that has been happening at least once per year on average for over a century. Raising it is not something the markets will react to. Not raising it is what would be problematic.

It only ever becomes an issue when the houses are split and the opposition party wants to use holding it back as a tool to push an agenda, which the Republicans did multiple times under Obama and Clinton and are threatening to do again currently.

realitykeeper

https://www.boards.ie/discussion/comment/120116789#Comment_120116789

Yes they might get away with it this time but we are very near the end of the US dollar as the world reserve currency. I would give it even odds of retaining that status until the end of the year.

Notmything

To quote Realitykeeper- "I recommend people start growing their own vegetables."

You've been singing this song for years now, this time you're after digging up a 13yo thread. Other than blind optimism what evidence is there that your right this time?

Chips Lovell

Mod Note

Thread is 13 years old. If you want to start a new discussion on the U.S. economy, start a new thread.