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Global Economic Collapse?

(53 Posts)
Cortina Mon 22-Aug-11 10:56:34

Have seen various posts on FB and reading similar in papers about USA eventually & inevitably going bankrupt which will apparently lead to a global economic collapse?

Looking for someone really to give a cheerier perspective that knows more about economics than me, not difficult smile

CherylWillBounceBack Mon 22-Aug-11 12:09:49

Frankly, there is no "cheerier perspective" on this. Governments worldwide are trying to push back the tide of an inevitable failure (one way or another) of the debt based money system that we've been using.

Globally people have been living beyond their means, borrowing from future generations and getting high on credit.

Some of us (savers, people who have zero debt and didn't buy into property bubbles for profit) haven't, and are currently being shafted for being prudent.

I for one welcome a system collapse and reset so we can live in a more sustainable fashion - but I fear that the powers that be will try and put this off as much as they can. All they will create is incredibly volatility in the financial markets in the meantime.

Protect yourself by diversifying your assets as much as possible. Don't take on debt. Think about what's important in life - relationships, enjoying the small pleasures and your health.

Cheer yourself with the notion that collapse now will probably be a good thing for future generations and the environment.

TartyMcFarty Mon 22-Aug-11 12:11:55

I really resent the pompous 'some of us save' retort. Many if us can't afford to.save.

TartyMcFarty Mon 22-Aug-11 12:12:25

Excuse typos - posting from phone.

AlpinePony Mon 22-Aug-11 12:16:01

Oh my. Do we have a sock-puppet?

I swear cheryl's post is word-for-word lifted from housepricecrash. hmm

Meglet Mon 22-Aug-11 12:16:10

I'm sure it will happen. 2008 was just the start.

I scare the crap out of myself reading the business pages every weekend. I hope we can muddle through.

CherylWillBounceBack Mon 22-Aug-11 12:18:22

I fully understand that some people can't afford to save. That's fine.

That doesn't mean that those of us who do should have our savings devalued in order to bail out those who have over stretched themselves with debt.

TartyMcFarty Mon 22-Aug-11 12:20:07

What's your solution then? I would feel very fortunate to have a nest egg at all.

Whatmeworry Mon 22-Aug-11 12:20:15

They haven't fixed the problems of 2008, in fact if anything the baliouts rewarded the benkere for their behaviour - so it wiill happen again.

What anyone should to do is the question.

chibi Mon 22-Aug-11 12:24:04

what are you going to do then, chezzabounceback, make love to your savings while the world burns, content that you saved, and didn't bail out any profligate debty losers?

sheesh

TartyMcFarty Mon 22-Aug-11 12:25:23

From a personal perspective we have nothing to lose (ie no equity since house prices fell significantly) so I'm trying not to worry about losing our house should either of us lose our job. What bothers me greatly is inflation.

ragged Mon 22-Aug-11 12:26:45

Inflation is good (brilliant, even) if you're in debt.

TartyMcFarty Mon 22-Aug-11 12:30:23

I don't understand. I mean the inflation in day-to-day living (I'm stupid at this!) We only have mortgage debt.

TheBride Mon 22-Aug-11 12:37:39

"We only have mortgage debt."

Exactly. Inflation should inflate the value of your asset (house) relative to the debt secured on it (which is fixed).

ie if you borrowed £100, the bank wont say "well actually, inflation is 5% so you now owe me £105", and £100 is now worth less than it was.

The only reason you should worry about inflation is that the traditional way to stop inflation is to raise interest rates.

TheBride Mon 22-Aug-11 12:41:29

FWIW I think this is the crash that was always going to happen. The banking crisis was just a symptom of the wider problem of developed country indebtedness. We are in an unprecedented situation where government issues debt of the US is not considered "risk free" (ie payback=as certain as it can be).

The euro will almost certainly collapse- we're all just pretending it wont because we can't compute the consequences.

CherylWillBounceBack Mon 22-Aug-11 12:42:51

no chibi. The point is that my savings (which I worked hard for, and lived frugally to have) are being inflated away. That's why buying assets (other than UK houses, which are hideously overvalued) is protection.

I don't want to see the world burn, but I do want to see a fair system.

TheBride is right. Inflation is a god send for those in debt.

Whatmeworry Mon 22-Aug-11 12:44:38

They are going to inflate their way out, its the only way.

TheBride Mon 22-Aug-11 12:51:58

That's why gold is through the roof. It's a huge inflation hedge. Why? Because, unlike currency, which can, and will be printed at will, there's a fixed amount of it, and it is not really consumed. The vast majority of the gold that has ever been mined is floating about the planet somewhere.

CherylWillBounceBack Mon 22-Aug-11 12:53:34

Just one more post to say I really find it fascinating the way that people attack those who didn't participate and who always questioned the amount of debt (both consumer and government) as if they have no right to be annoyed about what's happened.

Why hate people who live within their means?

alphabettyspagghetti Mon 22-Aug-11 12:53:37

I'm going to get shouted for this but....

<dons flame proof suit>

I think the econmic collapse can be a good thing after the initail shock has worn off. Once everyone has got used to it, things will be fairer, a sense of enitlement will be reduced, people will start to appreciate what they have and this can only be good a good thing for society in general.

CherylWillBounceBack Mon 22-Aug-11 12:55:50

Precisely alphabetty!

TheBride Mon 22-Aug-11 12:57:38

Actually alpha, probably not, because the super rich wont actually be affected by it that much. The middle classes will be hugely affected, which has had unfortunate consequences if you look at historic examples. Scapegoats will be found. The poor will be hugely impacted by falls in tax takes.

I know what you're saying but it's going to be so painful to get there. I'm nt sure it's worth it.

alphabettyspagghetti Mon 22-Aug-11 12:58:07

On a more personal level, I'm really looking forward to watching a few chioce people I know who think they better then everyone else because of material posessions be taken down a peg or two.

Callisto Mon 22-Aug-11 13:01:19

I think that, as usual, for the rich and very rich the GEC will be a mere ripple on their pond of consumerism. For the rest of us it will mean hard times for a while. I'm not convinced that there will be a GEC though. Far too many governments (including the Chinese) have far too vested an interest in an economically viable West for there to be complete meltdown. America is still the world's biggest economy and the world's biggest manufacturer, once they are back on track the rest of us should follow suit. I fear for the demise of the Euro though.

soverylucky Mon 22-Aug-11 13:03:01

Message withdrawn at poster's request.

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