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[WayneMorse]

http://www.theguardian.com/business/2015/mar/28/rising-dollar-debt-fears-global-economic-crash

Greek ministers are spending this weekend, almost five grinding years since Athens was first bailed out, wrangling over the details of the spending cuts and economic reforms they have drawn up to appease their creditors.

As the recriminations fly between Europe’s capitals, campaigners are warning that the global community has failed to learn the lessons of the Greek debt crisis – or even of Argentina’s default in 2001, the consequences of which are still being contested furiously in courts on both sides of the Atlantic.

As Janet Yellen’s Federal Reserve prepares to raise interest rates, boosting the value of the dollar, while the plunging price of crude puts intense pressure on the finances of oil-exporting countries, there are growing fears of a new debt crisis in the making.

Ann Pettifor of Prime Economics, who foreshadowed the credit crunch in her 2003 book The Coming First World Debt Crisis, says: “We’re going to have another financial crisis. Brazil’s already in great trouble with the strength of the dollar; I dread to think what’s happening in South Africa; then there’s Malaysia. We’re back to where we were, and that for me is really frightening.”

Since the aftershocks of the global financial crisis of 2008 died away, the world’s policymakers have spent countless hours rewriting the banking rulebook and rethinking monetary policy. But next to nothing has been done about the question of what to do about countries that can’t repay their debts, or how to stop them getting into trouble in the first place.

 

[CitizenVectron]

Well most of them got away with it, so they had no reason to change except the law. But the laws have been watered down since 2008 at the request of the banking and finance sectors. So, yeah, it will happen again. And they'll probably get away with it again, too.

 

[Pastry]

Dollar is too high, we're going to have a financial crisis.
Dollar is too low, our economy is fucked.

No matter where the dollar is at someone is going to be crying.

 

[xbhaskarx]

Dollar is too high, we're going to have a financial crisis.
Dollar is too low, our economy is fucked.

No matter where the dollar is at someone is going to be crying.

Get rid of the dollar, start using Bitcoins.. problem solved!

 

[trinest]

I can't wait for this to happen and effect Australia and watch Abbott squirm.

He will probably be all like "BUT BUT LABOR"

 

[More Fun To Compute]

The financial system is always terrifying and on the verge of collapse. The idea of the black swan type event though is just that when it happens it will be unexpected and the major players who "fix" the system can't deal with it.

 

[toxicgonzo]

As Janet Yellen’s Federal Reserve prepares to raise interest rates

The stock market is going to have a field day with this.

 

[The Llama]

Dollar is too high, we're going to have a financial crisis.
Dollar is too low, our economy is fucked.

No matter where the dollar is at someone is going to be crying.

Heh, seriously. Like, yeah I can understand these viewpoints, but no one is ever going to be happy with how things are valued. Which I guess is just the way the system works.

 

[M-PG71C]

The stock market is going to have a field day with this.

They already have, even a slight word change and the fucking S&P500 will lose a couple percentage points. It's ludicrous, the rate has to go up or we risk deflation.

Somebody has to lose in the game of capitalism, sucks huh?

 

[Trouble]

Get rid of the dollar, start using Bitcoins.. problem solved!

We shall cure the patient by killing him.

 

[May16]

We shall cure the patient by killing him.

Well it would shut him up!

 

[Bam Bam Baklava]

They already have, even a slight word change and the fucking S&P500 will lose a couple percentage points. It's ludicrous, the rate has to go up or we risk deflation.

Somebody has to lose in the game of capitalism, sucks huh?

The rate has to go up or we risk deflation?

 

[Mii]

You have a few options on what to fear:

1) take the stance that we haven't left the last crisis, which is largely true of some countries in Europe. They need to realize you can't have a monetary union without a fiscal union, AND austerity is a terrible idea. This stagnation partly describes oil's drop in price.

2) BRIC countries are beyond the point of overheating and are currently entering a period of slower growth, partly due to stagnation in Europe, over speculation in their domestic markets, and over reliance on infrastructure investment as a means of gdp growth. This is possibly another factor in oil prices are dropping.

3) oil producing nations which are over reliant on oil revenues are experiencing a nasty shock all at once, brought on by the above, North American fracking, energy efficiency improvements, and a flip in speculation from long to short.

The coming events aren't a global crisis. 1) is a regional crisis of policy, 2) is a cyclical matter partly impacted by 1, and 3) is an adjustment to a new normal because of North American fracking and partly 1 and 2. Any additional countries actually defaulting won't have a significant global impact (Argentina's really only mattered to Argentinians and some European investors); the reason European crises matter more is because of their monetary union. No Euro and no one would have cared if Greece defaulted. The events above are happening around the same time, but only partly connected.

The US for the most part shouldn't be too concerned. As much as we trumpet global trade, we rely very little on exports and global investment. The US is in the middle of its upward swing in the cycle and probably has another 2-4 years to run. Most economic indicators have trended towards strength in the US market. We used stimulus when we needed unlike Europe, we reformed our banks quickly and have finished many adjustments for it, we're beginning to deregulate again which will encourage taking higher risk at the right point in the cycle, we stand to benefit from energy independence economically, and we're in the best point of the business cycle.

Americans, go take some vacations abroad in the next couple years to help your friends abroad and enjoy the exchange rate while it lasts.

 

[Randolph Freelander]

The rate has to go up or we risk deflation?

Yeah, that totally runs counter to the concern. The theory is that inflation would run too high if the rates stay low. The problem: inflation is nowhere near target, let alone running high. And yet they want to lean towards bumping the rate anyway, presumably because "reasons."

 

[Mii]

The stock market is going to have a field day with this.

Yellen has been clear for a while now to expect this to start between June and Swptember, and to go up slowly. The market has already priced the increases in, for the most part.

 

[Caronte]

Dollar is too high, we're going to have a financial crisis.
Dollar is too low, our economy is fucked.

No matter where the dollar is at someone is going to be crying.

Join the Euro and do what Germany tells you. It's working great for Europe.

 

[Arksy]

Will this affect the US directly? The article makes it sound like the US is recovering and the strengthening dollar is going to be good for the US and bad for everyone else.

 

[giga]

Yeah, that totally runs counter to the concern. The theory is that inflation would run too high if the rates stay low. The problem: inflation is nowhere near target, let alone running high. And yet they want to lean towards bumping the rate anyway, presumably because "reasons."

Core CPI isn't too far off. The headline rate is low because of transitory factors, like low energy prices. And any rate increases this year will be minor. Policy will remain accommodative for a long, long time.

 

[Mii]

Will this affect the US directly? The article makes it sound like the US is recovering and the strengthening dollar is going to be good for the US and bad for everyone else.

See my comments above. Go take a vacation.

 

[Ra\/en]

Well I think the next couple of years in Alberta are going to be rough for sure. Can't speak to the rest of Canada, but we are quite reliant on oil.

 

[SRG01]

Well I think the next couple of years in Alberta are going to be rough for sure. Can't speak to the rest of Canada, but we are quite reliant on oil.

Rough is an understatement. Much of the real estate in Edmonton and Calgary is directly tied to oilsands money. Calgary is already experiencing a downturn and I'd hate to see Edmonton's numbers.

 

[Corronchilejano]

No matter where the dollar is at someone is going to be crying.

I could use a global crash. Would save me quite a bit when buying a new PC.

Spoiler

I'd lose my job tho...

 

[Perfect Blue]

Truly the only solution is to go for the gold standard. /sarcasm

 

[Arksy]

See my comments above. Go take a vacation.

Not form the US, from Australia. Had some plans to head to the US and start a small business, but given that the AUD has crashed about 15% this year. Given that it looks like it's going to get worse, especially considering the Reserve Bank of Australia is considering a further record rate cut, I might have to wait a decade. Sad.

 

[Hale-XF11]

I'm still trying to recover from the recession.

 

[Log4Girlz]

Not form the US, from Australia. Had some plans to head to the US and start a small business, but given that the AUD has crashed about 15% this year. Given that it looks like it's going to get worse, especially considering the Reserve Bank of Australia is considering a further record rate cut, I might have to wait a decade. Sad.

Why would u want to open a business here?

 

[Zyzyxxz]

Will this affect the US directly? The article makes it sound like the US is recovering and the strengthening dollar is going to be good for the US and bad for everyone else.

Strong dollar also means that our exports will become pricier and thus we may lose out on export trade which we've been at a deficit for quite some time now so it wouldn't help.

 

[Ecotic]

This article never explicitly lays out what will cause a new crash, just something very vague about 'developing countries might not pay'. The 2008 crash was caused by something very specific, the frenzy to overload on MBSs and become catastrophically over leveraged with mortgage debt that became worthless. If someone wants to claim another crash is coming they need to specify what is the exact problem, because developing countries have been taking on debt to invest in their future for a long time and is absolutely nothing new.

 

[Condom]

This is not how crashes work, nothing is going to collapse because of the things in the article.

Eurozone is fragile but because of political reasons, they need to stop being as conservative as your local priest and start investing in the future.

 

[Deleted member 13876]

You have a few options on what to fear:

1) take the stance that we haven't left the last crisis, which is largely true of some countries in Europe. They need to realize you can't have a monetary union without a fiscal union, AND austerity is a terrible idea. This stagnation partly describes oil's drop in price.

Good luck with that when all countries have political parties in place that continually shout that there is no alternative to austerity.

 

[DeFiBkIlLeR]

Dollar is too high, we're going to have a financial crisis.
Dollar is too low, our economy is fucked.

No matter where the dollar is at someone is going to be crying.

That's only because America abuses its position of having the world reserve currency by piling up mountains of federal debt.

If you sorted the debt out, the value of the Dollar would have no real bearing on the real world American economy, it would find its own natural, stable value.