Current financial state of the USA and it's impact on the gaming industry

[sushkis2]

So, I've just heard that the US have got themselves in a sticky situation, on the account of borrowing too much money from the chinese. Since a major part of the general gaming industry is revolving around the US, I think there may be some negative effects on the business in question. What's your take on the situation?

I myself am from Europe and Have just found out about this whole circus and the full extent of the situation. Enlighten me. Enlighten each other. Just let's not blame this on anybody, shall we?

 

[Abomination]

On the bright side, with the current US administrative gridlock, it's not as though any legislation can be passed to censoring or limiting games out of fear it causes children to become violent...

 

[Phrozenflame500]

I'm not a specialist in economics and other people could probably explain it better, but it's a bit more in depth then just borrowing money from the Chinese (as a matter of fact, most of its debt is to its own private citizens, with China only holding roughly 10% of the debt). The economy is in the toilet with high unemployment, and the government is too gridlocked politically to do anything about it.

Most of the issues with the gaming industry are the generally standard financial stuff: lower spending so less sales (and a bigger focus on price), plenty of inexperienced employees for hire leading to a "throw more people at it" approach to problem solving and higher expenditure due to general higher prices.

There is probably more things, but as I said economics isn't my strong suit and I'll leave it up to people (hopefully) more knowledgeable to go more indepth.

 

[Eve Charm]

Well it's not really hurting the games industry at all since the government really doesn't have an hand in it. The ESRB isn't government regulated like other countries so that isn't stopping anything from not getting rated before it comes out. At worst the only effects can be when companies have to pay more taxes and pay more into obama care.

 

[MysticSlayer]

I can tell you two things:

1. You have lost a great thing to learn about our issues.
2. Don't inquire further into them. If things keep up, I'm pretty sure listening to America's politics is going to become the number one cause of suicide in the next few years.

OK, joking aside, the basis is that the United States government is heavily in debt.[footnote]Just as a side note, it is been a while since I seriously looked into this issue, at least on the level of having to write about it. If anything has changed from what I've said, or if I'm messing up my economics, feel free to correct me.[/footnote] If you want to get an idea of how bad, just watch this clock [http://www.usdebtclock.org/] and compare our debt to GDP. Some of our debt is owed to China, some to Japan, some to U.S. citizens, some to programs within the U.S., and a bunch of other areas (i.e. the idea that all of our debt is in China is false, though a lot of it is there). The problems that further arise are:

1. The American government, whether you're dealing with Republicans or Democrats, is horrible at dealing with the deficit (the amount we lose every year), and as a result, the debt (the total amount we owe) is constantly increasing. We haven't had a surplus since 2001! And before that, we had pretty much been on a streak of decades of debt accumulation until Clinton brought us to a surplus in 1999.
2. The American population, no matter how much they clamor for wanting to lower the debt, isn't willing to lower the debt. I can't find it now, but around 2011 Pew Research did a survey and found that Americans didn't want to increase taxes on themselves, but they also didn't want to decrease spending on anything except foreign aid. In other words, no matter what Americans say they want, if the questions are asked correctly, they really want lower taxes and higher spending. Do the math. It doesn't work.
3. The American government is in complete gridlock, provided it is even working to begin with. Both sides are so hard set on their ideologies that they practically refuse to work together.
4. Considering the way American government is set up and the current political divide between Republicans and Democrats, don't expect this problem to sort itself out any time soon.

As for whether or not China controls us, it's up for debate. Some will cite how "the debtor is servant to the lender" while others will point out that China relies on our consumerism to run its own economy (pretty much everything over here is made in China unless the company making it ascribes to the "Made in U.S.A." campaign). I don't know enough about the relationship between the two to really know how it will play out. My guess is China won't bother to tear us down with our own debt until their economy no longer has any use for the U.S.

As for how it will affect the video game industry, it's hard to tell. Government shutdown won't prevent games from being made or rated, as games are designed by private companies and the ESRB is an organization unaffiliated with the government. After that, it really depends on how companies can handle Obamacare, as well as how people will respond in tough economic times. Certain markets are comparatively unaffected by issues like unemployment, recession, and similar issues. [footnote]An interesting note is that some markets actually do better in tough economic times, but I doubt the gaming industry will fall under that category, given that games are a luxury item.[/footnote] Ultimately, it depends on how game companies can handle tougher economic times, and that's based on whether or not people want to spend during those times. Keep in mind, we've been doing better on unemployment over the last few years [http://data.bls.gov/timeseries/LNS14000000],[footnote]Do bear in mind that unemployment is somewhat hard to track in the U.S. There are certain conditions one has to meet to be considered "unemployed", and those conditions don't cover everyone who is actually unemployed. For all we know. In other words, unemployment is much higher than in that link, but again, we can't track it, so we can't really factor that in, nor do we really know if it has been seriously increasing as the official unemployment rate drops.[/footnote] even if we're still not doing good on it. Unfortunately, I really don't know much about how the shutdown will affect all these economic issues and, as a result, indirectly affect the video game industry.

Now, if the U.S. is forced to default on its debt...yeah, we'll have some issues.

 

[Owyn_Merrilin]

It's not even the debt that's the problem. What's going on is a small minority of Senate Republicans (the ones who consider themselves a part of the Tea Party) are holding the government hostage in an attempt to de-fund Obamacare, our half-assed attempt at universal healthcare that, despite the hyperbolic claims, is less socialism, more bringing some law to the wild west that is the insurance industry. If it was really as far out there as they're claiming, we'd have something like what the Canadians or British[footnote]Fully socialized, government run[/footnote] have, instead it's more like what they have in Japan[footnote]Requiring people to buy private insurance if they can afford it, limiting costs, and providing a safety net for the people who are honestly too poor to afford insurance even with the regulation[/footnote], except it doesn't even go that far.

Anyway, these republicans have managed to block any budget legislation from getting passed, which has caused large parts of the federal government to shut down, including many of the civilians who work for the military, and the entire national park, monument, and museum system. So as it stands right now, thousands of people are out of work because of some political posturing, and the debt doesn't even play into it.

The debt comes in in two weeks, when we hit what's called the "debt ceiling," which is the maximum amount of money the government is currently allowed to go into debt. It's been raised without issue every time it's been needed since the days of FDR, but this past Spring, there was a showdown over it, which almost led to the government shutting down then the way it has now, until an 11th hour deal raised the debt limit just far enough that we'll hit it two weeks from now, instead of several months ago. There's some speculation that the government will come back into operation when that becomes an issue, because if the debt limit doesn't get raised, the government misses its interest payments on its loans, which makes the credit rating drop, which makes other nations less likely to loan money to us when it's needed. We already dropped from a AA rating to an A rating due to what almost happened ~6 months ago, and then it was just because it /almost/ happened.

Edit: As for how it affects the videogame industry, it'll be a while 'til it trickles down, since it's made up of private businesses that aren't funded directly by the government. If this causes the entire economy to tank worse than it already has, then the games industry will be in trouble, but that's a long term issue, not a short term one. In the short term, several thousand government employees are on unpaid vacations of an indeterminate duration, which will definitely harm the economy, but like I said, long term, not short term.

 

[AD-Stu]

The US economic situation is hardly new, as people have already stated above, but kudos to OP for catching up and taking an interest

I don't think it's a direct problem for the gaming industry though, since it's run by privately-owned companies and you're talking about government debt. Remember that most of these gaming companies are multi-nationals too, so their risk in the US is offset to an extent by their operations in other countries. Long story short, as long as consumers keep buying games then they won't be affected.

Of course if the US economy as a whole falls in a heap and there's mass unemployment or a huge shift in consumer confidence then spending by US citizens on video games is likely to go down (since they'll be more concerned with paying for food and housing than luxuries like video games).

Long story short though, if US government debt hasn't made the gaming industry collapse over the past decade, then it's unlikely that this latest round of news is going to change the situation significantly.

 

[briankoontz]

It doesn't matter how big the American government's debt gets, since the world can't afford it to default. An American default would decimate the global economy, and wouldn't be tolerated by pretty much anyone - right-wing American politicians raise the issue as part of a long-term project of corporate domination of the economy.

The "current financial state of the US" has been gradually worsening since the 1970s, due to poor economic policy and terrible economic priorities, such as yearly $1 Trillion military expenditures while schools are being closed, roads are in disrepair, and the health care system (regardless of Obama's law) is far worse than that of most other industrialized countries.

Remember the Greek government debt crisis a few years ago? Even though the Greek economy is a fraction of the American one, there was no way Europe was going to let Greece default, since it would harm Europe as a whole. The Eurozone and the International Monetary Fund used the threat of Greek default to take control of the Greek economy, so $67.5 Billion of Greek Government assets were corporatized, among other elements of domination. Go ahead and ask the Greek people how their lives have been since these "helpful changes" were implemented there. Then ask the multinational corporations how helpful these changes have truly been.

That's the model that's desired for the United States, among other debtor nations - sell off public assets to corporations, take what little control regular people have over their economy away from them and put it into the hands of international banks and multinational corporations. Disempowering people further means their wages and benefits are (further) reduced and powerful institutions further enriched and empowered.

The world is dying, ecologically, at least according to the understanding of those in power (which will come to pass if they have their way). There are no long-term consumers of capitalist products and services. This understanding has transformed the capitalist human into the capitalist dragon, from an investor into a hoarder, from a man into a beast.

In a dying world the entire earth eventually becomes a ghetto, and the ruling idea of the rich is to escape the ghetto. The first step is a siege mentality, where gated communities are built, walls to keep out the unworthy, while wealth and power are amassed and capabilities improved. By the time the ghetto expands to include even them, they'll be gone, through a combination of nano-tech, computer-tech, and outer-space tech. In a dead world filled with zombies, these last bastions of humanity will take to outer space to "repopulate the human race", neglecting to understand that unlike the "zombies", these "human beings" were the precise creatures to have murdered an entire planet in the first place.

But they'll be super-beautiful, 6-packed, breast-augmented, buffed with their own sense of self-worth, super-knowledgeable, super-intelligent, super-capable, all teched up and ready to go. They'll be Battlestar Galactica, Star Trek, so photogenic and Hollywood and super-awesome. So fuck history, fuck reality, they've transcended all of that. They are going to colonize the final frontier and no earth or zombies or human beings are going to stop them. They are the real human beings and there's no one they've left alive to tell them they're wrong.

 

[sushkis2]

Oh, wow, that last post took some time sinking in for me. Sounds a hell of a lot like what was the general idea of Syndicate, like, nations have become obsolete, and megacorporations run everything. Now here's the question, do Americans actually want their country to get back on track, or just want to watch the world burn?

A particular moment from the movie "Million dollar baby" springs up in my mind, when that chick got her mother the new house, and she was like, why did you get me this house, i will lose my social support if the government finds out i live here... So I thought, that there are millions of such leeches customary to the US economy, just sitting on their fat asses, getting government money for no good reason. Why exactly do they sustain them? Why not bother making them earn money and pay the country taxes, by, well, you know, just cutting off their so called social support and making them actually think about how will they put bread on their table?

 

[Stephen St.]

Oh, wow, that last post took some time sinking in for me. Sounds a hell of a lot like what was the general idea of Syndicate, like, nations have become obsolete, and megacorporations run everything. Now here's the question, do Americans actually want their country to get back on track, or just want to watch the world burn?

A particular moment from the movie "Million dollar baby" springs up in my mind, when that chick got her mother the new house, and she was like, why did you get me this house, i will lose my social support if the government finds out i live here... So I thought, that there are millions of such leeches customary to the US economy, just sitting on their fat asses, getting government money for no good reason. Why exactly do they sustain them? Why not bother making them earn money and pay the country taxes, by, well, you know, just cutting off their so called social support and making them actually think about how will they put bread on their table?

Such "leeches" are largely a myth. Most people in long-term unemployment are there because they cannot get a job, not because they don't want one. It's impossible for a free market economy to have no unemployment, so there will always be a need for welfare. Additionally, the idea of welfare and social services is to provide opportunities to people, to give everyone (very limited) shot at what life they want to live. A value that, in my opinion, is worth keeping.

 

[sushkis2]

Ok, that one may have been a bit of an overstatement.

Here's an another related question, why do people seem so tranquil up there? I thought the 'murican patriots would be up in arms and out for blood right about now. I'm sorry if I'm bringing up some kind of bad stereotypes here or crossing any lines, but, currently, America is sort of an elephant in the global room right now, with all the crazy stuff that's going on there. And, I like any sensible human being would like to know as much about it.

 

[MysticSlayer]

Ok, that one may have been a bit of an overstatement.

Here's an another related question, why do people seem so tranquil up there? I thought the 'murican patriots would be up in arms and out for blood right about now. I'm sorry if I'm bringing up some kind of bad stereotypes here or crossing any lines, but, currently, America is sort of an elephant in the global room right now, with all the crazy stuff that's going on there. And, I like any sensible human being would like to know as much about it.

Americans are really angry. Just because we aren't taking to the streets in some violent protest doesn't mean we aren't angry. The problem is, some Americans want a shutdown, and I can think of at least one Tea Party member I know who has been strongly supporting the idea of a shutdown. Others think it is just a stupid "solution" to the problem. I'd imagine most sensible Americans, though, are angry. Republican approval ratings are absolutely horrible [http://www.pollingreport.com/cong_rep.htm], and Democrats, though slightly better, aren't really that much better [http://www.pollingreport.com/cong_dem.htm]. Congress's approval rating in general is abysmal [http://www.cnn.com/2013/09/30/politics/cnn-poll-congress-approval/], and while Obama has seen worse, his approval is still rather low [http://www.gallup.com/poll/116479/barack-obama-presidential-job-approval.aspx]. In other words, this indicates people are angry.

Personally, I don't expect to see Americans really getting too violent over this. Occupy was more aggressive than most, and even that was relatively tame outside of a few cities like Oakland [http://usnews.nbcnews.com/_news/2012/01/30/10268080-occupy-oakland-400-arrested-after-violent-protest?lite]. Not to mention, any violent protest would be stupid. Americans might be considered well armed, but we're still no match for the military and police. As a result, most will just wait until the 2014 election to get rid of as many Congressmen as they possibly can. Unfortunately, at the best, we'll probably just be replacing one ideologue with another.

 

[briankoontz]

Oh, wow, that last post took some time sinking in for me. Sounds a hell of a lot like what was the general idea of Syndicate, like, nations have become obsolete, and megacorporations run everything. Now here's the question, do Americans actually want their country to get back on track, or just want to watch the world burn?

A particular moment from the movie "Million dollar baby" springs up in my mind, when that chick got her mother the new house, and she was like, why did you get me this house, i will lose my social support if the government finds out i live here... So I thought, that there are millions of such leeches customary to the US economy, just sitting on their fat asses, getting government money for no good reason. Why exactly do they sustain them? Why not bother making them earn money and pay the country taxes, by, well, you know, just cutting off their so called social support and making them actually think about how will they put bread on their table?

Such "leeches" are largely a myth. Most people in long-term unemployment are there because they cannot get a job, not because they don't want one. It's impossible for a free market economy to have no unemployment, so there will always be a need for welfare. Additionally, the idea of welfare and social services is to provide opportunities to people, to give everyone (very limited) shot at what life they want to live. A value that, in my opinion, is worth keeping.

There's a lot more going on here than you guys are talking about. Examine the NEET, Freeter, and Freegan cultural movements in highly industrialized countries, for example - they are prevalent in Japan, the UK, and the US.

Also consider that the global economy is akin to the mafia - the more successful one is the more damage one does, usually, like the difference between a highly paid mob boss and a lowly paid mob janitor. Morally speaking, one should prefer to be the janitor - moral well-being and financial well-being are usually at odds in a crony hyper-capitalist world. Gordon Gekko, after all, is quite a wealthy man. According to someone with no morality, that's makes him a "good man" who "puts bread on the table". He's infinitely better than a low-wage worker who toils for little pay.

There are people who wish to not partake in the global economic system, but these people are not "leeches". It's a moral choice. If the only employer is the mafia and one refuses to join on the basis of not wanting to kill people, it's more than a little ridiculous for the mob assassins to label that person "a leech on the mob society", although the ridiculousness probably wouldn't stop them. Why stop at insulting them - just kill the useless "leecher", so that one less person is around who is not properly integrated into the murderous society.

 

[Kinitawowi]

There are people who wish to not partake in the global economic system, but these people are not "leeches". It's a moral choice. If the only employer is the mafia and one refuses to join on the basis of not wanting to kill people, it's more than a little ridiculous for the mob assassins to label that person "a leech on the mob society", although the ridiculousness probably wouldn't stop them. Why stop at insulting them - just kill the useless "leecher", so that one less person is around who is not properly integrated into the murderous society.

I wish I could believe that my cousin who can barely get out of bed long enough to even bother to fucking sign on, never mind look for a job, was doing it in order to make a moral stance and opt out of capitalism; but the reality is that he's a lazy shit who'd rather bum money off everyone else in the house and spend all night playing CoD and Skyrim.

 

[briankoontz]

"The only thing worse than being exploited by capitalism is *not* being exploited by capitalism".

Consider how depressing it is to make a moral choice in the face of a hostile society - Socrates might have been a proud person but only hope and more than a bit of sadism kept him going.

Examine the life of Diogenes of Sinope, who may well have "spent all night playing CoD and Skyrim" had those been available to him. Instead he found creative ways to annoy the "upwardly mobile" materialist society in which he lived. Socrates, Diogenes, as well as Jesus Christ who many modern people celebrate were all trolls within their respective societies, yet we demonize modern trolls and tell them to go away. We've obviously learned very little over the centuries.

Regular people who make this moral choice don't have the wisdom of Socrates or Diogenes to fall back on so depression is the typical outcome.

Question: How many ancient Greeks called Diogenes a "lazy shit"?

Answer: Many.

The more corrupt the society becomes, the more tendency there is to "opt out" of the system. This usually has a cleansing effect on the system, since it can't afford to have so many people opting out. The problem, however, is that these are special apocalyptic times. The rulers are killing the world, and the end-game for them where they leave the dead planet is only a century or two away. So the normal cleansing mechanism of "opting out" is broken.

It's rare to find anyone willing to discuss these issues, because most people feel too much fear at the prospect of such a bleak future. But bear in mind that the world will only die if the rulers are allowed to kill it.

There's a tendency among gamers to not want to discuss the reality of gaming because they feel it might threaten the existence of gaming. It's safer to demonize the "lazy shit gamers" than to deal with their underlying cultural reality.

 

[crazyarms33]

It's not even the debt that's the problem. What's going on is a small minority of Senate Republicans (the ones who consider themselves a part of the Tea Party) are holding the government hostage in an attempt to de-fund Obamacare, our half-assed attempt at universal healthcare that, despite the hyperbolic claims, is less socialism, more bringing some law to the wild west that is the insurance industry.

Gonna go ahead and say it takes two to tango. When the Dems basically said "This is how it's gonna be, take it or leave it." and the Reps said "No, we don't like that." The Dems said "YOU'RE NOT COMPROMISING!" and here we are today. As far as bringing law to the wild west of insurance(love the phrase by the way) in no way shape or form does it do that. It's a multi-billion dollar tax that increases the cost of healthcare for men and women. Men will now pay twice as much and women a little bit less than that(estimates are at 1.8% last I checked). Also given that once it goes into effect, health insurance becomes mandatory and el Pres changed full time in hourly wages from 40 hours to 30 it makes no sense for this thing to be happen. People are working less which means they are making less and on top of that the gov't now expects them to pay more money(where people will get it I don't know) for health insurance that is mandatory. Yes, now in the US you HAVE to have insurance. It's stupid legislation IMO. Here is some interesting reading on how it will affect the average working American's income.
http://online.wsj.com/article/SB10001424127887323623304579061423122639430.html?mod=us_most_pop_newsreel

OT: It won't affect the gaming industry one bit. Business as usual pretty much.

 

[spartan231490]

It's not nearly as bad as everyone is making it out to be. The government has shut down the same way for months at a time during both Bush's and Clinton's administrations.

 

[Owyn_Merrilin]

It's not even the debt that's the problem. What's going on is a small minority of Senate Republicans (the ones who consider themselves a part of the Tea Party) are holding the government hostage in an attempt to de-fund Obamacare, our half-assed attempt at universal healthcare that, despite the hyperbolic claims, is less socialism, more bringing some law to the wild west that is the insurance industry.

Gonna go ahead and say it takes two to tango. When the Dems basically said "This is how it's gonna be, take it or leave it." and the Reps said "No, we don't like that." The Dems said "YOU'RE NOT COMPROMISING!" and here we are today. As far as bringing law to the wild west of insurance(love the phrase by the way) in no way shape or form does it do that. It's a multi-billion dollar tax that increases the cost of healthcare for men and women. Men will now pay twice as much and women a little bit less than that(estimates are at 1.8% last I checked). Also given that once it goes into effect, health insurance becomes mandatory and el Pres changed full time in hourly wages from 40 hours to 30 it makes no sense for this thing to be happen. People are working less which means they are making less and on top of that the gov't now expects them to pay more money(where people will get it I don't know) for health insurance that is mandatory. Yes, now in the US you HAVE to have insurance. It's stupid legislation IMO. Here is some interesting reading on how it will affect the average working American's income.
http://online.wsj.com/article/SB10001424127887323623304579061423122639430.html?mod=us_most_pop_newsreel

OT: It won't affect the gaming industry one bit. Business as usual pretty much.

Bull. This is the second time in the last year or two that the republicans have threatened to do this. If the dems caved every time they did it, nothing but what that small minority of tea party republicans wanted would ever get done. In fact, that's a big part of why the first half of Obama's first term was so weak: he was dead set on compromising with the republicans, who took it as an excuse to bully him into doing whatever they wanted. To put it another way, "we don't negotiate with terrorists." These people have proven time and time again that the definition of "compromise" in their vocabulary is "a word that the other party uses to signify weakness. An easy way of exploiting them." They won't take anything but a total concession, so attempting to compromise is pointless, because they're not interesting in an actual compromise, where both sides get something they want. The far right side of the republican party, and especially the tea partiers, are only interested in getting exactly what they want and not giving an inch to the other side.

Edit: also, major citation needed on that editorial. Obamacare is about regulating the insurance industry. It's not this nightmare that the pundits paint it as.

 

[Imperioratorex Caprae]

Ultimately, it depends on how game companies can handle tougher economic times, and that's based on whether or not people want to spend during those times. Keep in mind, we've been doing better on unemployment over the last few years [http://data.bls.gov/timeseries/LNS14000000],[footnote]Do bear in mind that unemployment is somewhat hard to track in the U.S. There are certain conditions one has to meet to be considered "unemployed", and those conditions don't cover everyone who is actually unemployed. For all we know. In other words, unemployment is much higher than in that link, but again, we can't track it, so we can't really factor that in, nor do we really know if it has been seriously increasing as the official unemployment rate drops. even if we're still not doing good on it.

A note on unemployment. It doesn't count people who no longer get unemployment or are seeking work. Its skewed to look better number-wise but in reality its higher than what "polls" say it is.

OT: The US Government spends heavily and plays bait and switch games with financial numbers so much its no wonder the average American is clueless at how Gov't spending and debt really work. Our "surplus" "given" to us by Clinton was drained from Social Security (which was supposed to be held for the retirees who paid into it) and now that we burned through that, the Social Security we pay off of every paycheck isn't being held for our retirement, its paying the SS retirement funds of those who are getting SS checks. And soon we won't be able to cover that because there aren't enough workers to cover the retirees and disabled.
Also our treasury keeps printing money without anything to back it up, which devalues our dollar further. And this Government shutdown is a testament on how the "ruling" party speaks about compromise and bipartisanship but won't have any discourse on hotbed issues and holds hostage other things so they can get their way. While on the other side of the aisle, the majority of Republicans have their heads shoved in the sand when it comes to standing up for their values because the media favors the left. Its sick, stupid, and a huge mess. And all because a majority of Americans give a fuck more about Honey Boo Boo and government handouts than working for a living and taking responsibility for their own lives.
Seriously, anyone who wants the US Government to run their lives are fucking morons. They take no responsibility for the things they break, and shift blame to the nearest convenient source.
Fucking jackasses, all of them.