Gridlock-The Collapse of the US Economy(UPDATED)

In the wake of recent election results questions and speculations are popping up as to how the lame duck, and the next congress will proceed as it pertains to the bloated Federal budget. The new incoming members of congress are already engaged in policy discussions in an effort to stream-line the agenda for the next two years.

With recent policies enacted at the Fed with regard to $1 trillion in debt monetization and toxic asset purchases we have begun to see the first stress cracks in the overall health of our economy and government. Beginning of course with Margin Collapse. Margin collapse is a direct result of devaluing the currency in the current environment. We have high unemployment, taxation is going to increase whether we like it or not, and price inflation in food and raw materials is destroying our buying power now. These pressures are affecting the ability of companies to maintain their existing structures. The market CANNOT SUPPORT the increase in price, yet without those increases the businesses can't survive, with the increases the business can't survive as their revenue streams are priced out one demographic at a time.

Cisco is my main example of margin collapse and here why this is breaking as of the authoring of this thread:
Wall Street falls as Cisco's outlook takes its toll-(Reuters)(Updated)

Cisco's (CSCO.O) shares lost 16 percent to $20.57 after the Internet network product provider's CEO, John Chambers, cautioned about "short-term challenges" in Europe and public-sector spending. Late Wednesday, the company forecast revenue and earnings well below estimates.

On a percentage-loss basis, if Cisco closes at that level, this would be the worst one-day percentage drop since July 14, 1994, when Cisco slid 17.71 percent, according to Thomson Reuters Datastream.

Howard Silverblatt, an analyst at Standard & Poor's, said this was set to be the biggest one-day dollar loss ever for Cisco's stock.

By early afternoon, 385 million shares of Cisco had traded, making this one of the 10 busiest days in the history of the stock.

The warning from Cisco also dragged down shares of other tech heavyweights: Microsoft (MSFT.O), down 1.7 percent at $26.48; Hewlett-Packard (HPQ.N), down 3 percent at $42.83, and Juniper Networks (JNPR.N), down 0.4 percent at $34.40. The drop in Cisco's stock reduced its own market value by about $21 billion in early trading, according to S&P.

The CEO is talking about a collapse in their margin, but there would be an even BIGGER sell off if he actually said it. Our politicians hands are tied ladies and gentlemen.

This is going to be a damned if you do damned if you don't situation. The stupid, wasteful and ridiculous policies of the last 6 administrations are starting to catch up to us, and no help is coming. Obama will not allow his precious social structure to collapse, instead he will direct the Fed to monetize even more debt.

These companies are going to start laying people off soon folks. Margin collapse is a nice way of saying BROKE. And you can bet that these companies will both lay people off en-masse AND raise prices, and that will fuel the spiral. This is the BS position we have been put in by these people. There's no way they're going to allow deep cuts to SS or Medicare or any other broke and indebted program the government has on it's books. The political pressure is still pushing against reform and cuts.

We will not pay our debt, we will not keep our standard of living, we will not prosper. There's writing on the wall and it is plain for all to see. I don't care who you voted for this election cycle. Put that aside PLEASE for just one minute and think about how much fraud you've seen in the last 10 years. How much waste of money, and lives we have seen. This is the product of our corrupt all powerful government. And this has to end, or we will.

We will have gridlock for the next two years, but before the next presidential election, we will be seeing much higher unemployment, homelessness, and hunger because of the policies of statist totalitarians who think THEY know better than the rest of us. Our problems haven't gone away because there's more red in the House and Senate.

Wake up people, we're still being robbed.

Likely Gridlock in Congress to Threaten Economy?

(AP) Political gridlock is supposed to be good for business. If bickering lawmakers can't agree on anything, the thinking goes, they can't pass laws and regulations that make the economy worse.

So will the midterm elections, which are expected to leave Congress at least partially controlled by Republicans and squaring off against a Democratic White House, be a help to the economy?

Don't count on it.

A standoff between the Obama administration and emboldened Republicans will probably block any new help for an economy squeezed by slow growth and high unemployment. Congress might also create paralyzing uncertainty for investors and businesses by fighting over taxes, deficits, health care and financial regulation.

All of this is culminating into something big. We have price inflation, margin squeeze across whole sectors of the economy, high unemployment, huge deficits and debt both public and private, and government that will do nothing to abate the crisis...No, instead they will score whatever political points they can until the whole thing comes down on us.

We need Constitutionally motivated reformers in this country BADLY, or we're going to fall to pieces entirely. There is still some time, in my opinion, to abate some of the pain by doing the right thing NOW. The longer we wait to make the necessary changes the worse things will get. We can't argue all day long over how we're going to keep Social Security and Medicare, and every other social program when the government is squandering every bit of wealth we have, devaluing the currency, and ensuring that whatever benefit can be derived from these programs are muted at best, non-existent at worst. Tied in with our wars overseas, the bases we maintain overseas, and the frivolous expenditures of every department of government and we have a situation that is unworkable in reality.

No one, not even the most right wing among us seems to want to accept this. We are in a collective state of denial and it knows no party lines. We are BROKE. BROKE! Period, end of story. We are in way over our heads and we're just adding more weight to the life boat, and it too is sinking with the ship...

What are you going to do riot? How will that pay your rent? Are we going to see union and socialist protests like in Greece where they destroy private property to scare the government into passing idiotic legislation to abate the chaos? I hope not. I hope we keep a firm eye on the culprits.

We're being played, we're being used, and we're being lied to. And people still think this is a right and left issue. NO! This is a question of reasonable vs. unreasonable economic theory. It is the difference between those who think it will all last forever, and those who believe we should defer our gratification so that future generations may enjoy the fruits of our prosperity. We are all about instant gratification now. And that sense of "must have it now" aided greatly to the circumstances that lead to this mess. It was vastly reflected in the way we've been voting for the last 20 years.

dude, we can't wait another 2 yrs
while this lame duck congress
twiddles it's thumbs. There will be
no America left.

reply to post by boondock-saint


Believe me I know.. America, I fear, has already passed into no man's land.

It is going to get really hard soon. I recommend you talk to your neighbors, your family. Set up networks, and collect a few supplies.

And then there's inflation, which is coming folks, make no mistake.

Update
Cisco's rout dents Wall Street but upside trend rules

(Reuters) - Cisco's discouraging outlook dragged Wall Street lower on Thursday, but the market fought back in a sign the bullish trend remains intact.

This is the latest update at the same link.


It is wishful thinking in my view to call this a bull-market move..

What horse-crap.

Even with cuts to SS and medicare and even with major cuts in defense we will still need to ride out a storm.

I really think that what the fed is cooking up is the only way out for us. It's not that it's a good plan, it's that the time for good plans is gone.

We will devalue our way out of the debt and compete with developing nations to become the primary exporter to Asian Markets.

It's going to suck. We will lose standard of living, short term lose jobs, mid term see higher taxes and an entire generation will be SOL on retirement if things don't run like clock work.

In the long run we will gain jobs, shift back to a production and export oriented economy and regain our footing. What our position will be when we level out is impossible to judge. We could remain a global power, we could spend 50 years recovering...

Unfortunately, I really think the YAY America! options are off the table. We got abused for too long before we realized how pervasive the exploitation really was. We were sold on the idea that capitalists weren't out for themselves, even while they flaunted their "greed is good" motto in our face. Too much of a good thing is what happened to us. Capitalism made us great and then we overdosed. Like pumping nitrous into an engine.. it's great fun until you put a rod through the block!

reply to post by Fiberx


It makes no sense to devalue a currency in the middle of an environment where people have no jobs and wages aren't likely to go up, and the market won't tolerate price increases. FDR extended the depression by devaluing the currency as well. And that is what we're doing today.

The depression is just beginning and this is what it looks like. One thing you're right on, is that the time for good ideas might very well have passed and we will take a lot of pain no matter what we do..But that is the product of kicking the can down the road.

This is going to be a damned if you do damned if you don't situation. The stupid, wasteful and ridiculous policies of the last 6 administrations are starting to catch up to us, and no help is coming. Obama will not allow his precious social structure to collapse, instead he will direct the Fed to monetize even more debt.

they're not protecting the social structure.....
where are they protecting the social structure??
they're protecting too big to fail banks!!
they're protecting wall street, and their big bonuses!!
they're protecting mers, robosigners, and the financial sector!!
And that is all that is being protected!!!

reply to post by dawnstar


Social structure in terms of social programs that MUST be cut in order for cuts to make any difference at all.
And yes, imagine that, government is engaging in fraud..Cause you know, I didn't make that clear or anything.

I agree. The question is not if, but when.

I am beginning to think a reset is the only to fix this now as painful as it may be.

reply to post by Anonymous Avatar


I wish that reset button was there. But it looks like this is going to be a disorderly collapse of economic supports rather than a measured draw down of of government that is BADLY in need, and the exposure and prosecution of fraud that is BADLY in need as well. There are too many selfish purposes, the George Soros' of the world, who have a vested interest in a greatly devalued dollar, and a much lower standard of living for Americans.

reply to post by projectvxn


Yes that is what I mean by reset. That is we are going to fall flat on our face and hopefully we will pick ourselves back up.

reply to post by projectvxn


That's exactly what brought me to my conclusion that the towel has been thrown into the ring. It only makes sense to devalue if the plan is to force China and other developing economies to let their currencies gain value. The only positive outcome of this is an opportunity to swap places with China and become the exporter to the stars.

It's a lot of garbage on our plate in the meantime, but I don't see any other options for our future. There isn't enough room for two mega-consumerist economies in the world. The worst possible position is to be the weaker consumer, fighting for the table scraps.

Congrats, you're paying attention.
Oh, this may be of interest.....

But then again, sometimes, ‘We are continually faced with a series of great opportunities brilliantly disguised as insoluble problems.’

reply to post by Perseus Apex


There is opportunity here, no doubt.

And I am hedging as we speak. Silver is a wonderful thing on a budget. At least then I'll still have buying power. And after discovery is completed in this case silver is going to shoot through the roof. Shortly there after the same will happen in the gold comex market and boom, instant upward valuation.

I'm saving gold for when I really need it. And food is ALWAYS a good investment, not just having food, but buying food commodities.

Once the financial collapse started, the government had 2 choices:

1) Bail out the companies, keep unemployment at bad but manageable levels, devalue the dollar against other currencies

2) Don't bail out the companies, totally lose control of unemployment, don't devalue the dollar

The funny thing is, the same people bitching about bailouts and government programs are those which would whine the loudest if they hadn't bailed out the companies...and unemployment would have reached new record levels far above what we're seeing now.

Clearly, they went with option 1). It's debatable which option would have been the better one for the people (in the short/medium/long term), but either way, it's too late now.

Another problem is the rise of new economic powerhouses. After WW2, most nations saw their infrastructure destroyed. The US had a big advantage in that its infrastructure remained unharmed. This allowed them to rise to the superpower it is today. However, a lot of nations have caught up to the US in terms of economy. India, Russia, Japan, and of course Europe are all on the tail of the US (or in the case of China already overtook it in terms of economy).

That means more COMPETITION, which from a consumer perspective is a good thing...but it can have some negative consequences. However, you can't stop globalization. If anything, this crisis made it very clear how national economies are inter-connected. When the US destroyed their economy through reckless deregulation, it dragged down almost the entire world. Given that many countries are either catching up or have already overtaken the US in terms of economy, it only makes sense that they are asking for the dollar to be replaced as the "global currency". Having all eggs in one basked is evidently bad given that a crash of the economy of the global currency drags down all nations.

Anyway, I think in the end one of the main issues is blind patriotism. For a lot of Americans its hard to accept that they're not the strongest economic powerhouse anymore...or not for much longer. I don't think devaluing a currency in the long term is sustainable, but in the short term they don't really have a choice. If they wouldn't devalue the dollar, the entire export industry would collapse, further harming the US economy.

reply to post by projectvxn

reply to post by projectvxn


What better way to call your bet than to say the money is fake in the first place. China no likey!
TPTB don't really care about the middle class in the USA. They are the missing level of the all seeing eye pyramid. Once they are collapsed, the symbol is complete.

We waste lives and money and reputation by being in wars that have no reason and no prospect for winning. We WILL lose and withdraw in the end. It is inevitable. Meanwhile we trash our economy by spending nearly 8 times as much as any other nation on earth on war toys. Indeed we should have a department of offense since that term fits our usually military activities.

Quit the middle east, bring our kids home, cut the military by 2/3, start manufacturing in the USA again and watch the economy turn around and head for the green. The "defense" jobs that are lost may certainly be moved to other technical areas like space exploration.

Let those who like wars pay for them out of their own pockets. Not with my money.