Thread: The strongest economy in the world

It's almost like the junk bond era. Lots of banks and lending institutions are in doo at the mo. Their 3Q earnings crashed and the outlook is doo as well. Nobody will buy their subprime or Alt A debt either. Fed is scared to raise interest rates but inflation is nudging up. High gas prices are hurting lots of industries. I'm hurting coz I live in Canada and I'm paid in US dollars. I want a protest march. Where's Al Sharpton when you need him?

Originally Posted by Jet Gorgon

It's almost like the junk bond era. Lots of banks and lending institutions are in doo at the mo. Their 3Q earnings crashed and the outlook is doo as well. Nobody will buy their subprime or Alt A debt either. Fed is scared to raise interest rates but inflation is nudging up. High gas prices are hurting lots of industries.

Yeah, this is happening. I check the gas prices in my hometown on gasbuddy.com.

I'm hurting coz I live in Canada and I'm paid in US dollars. I want a protest march.

Jet, I thought you were a Canadian. But your paid in USD, so I presume you're an American working for an American company based in Canada?

^ Milkman, I lived overseas so long, no Canucks will hire me (no local references, la). 555 So I work online for a NY company. They know my net worth by my work. I am Canadian by birth. About ready to move Stateside tho.

Yep. Things are just rosy.

updated 9:44 a.m. PT, Thurs., Jan. 24, 2008

DETROIT - Ford Motor Co. said Thursday it will offer buyout and early retirement packages to 54,000 U.S. hourly workers in an effort to cut more jobs and replace workers with those making a lower wage.

Entire: Ford offering buyouts to all hourly workers - Earnings - MSNBC.com

Allowing people to tap into their 401Ks with a debit card is putting a band-aid on a bullet wound and will exacerbate problems down the road (the future).

New Debit Card Borrows Against 401k
Thursday, 31 Jan 2008, 7:17 PM EST Created: Thursday, 31 Jan 2008, 6:48 PM EST In a move that financial analysts are calling a dangerous gamble, one company is offering a debit card that lets you tap into your 401k savings.

With the threat of a recession looming, many families are looking for ways to get some quick cash to make it through these hard times.

Borrowing against your 401k isn't a new concept, but financial planners say making that money so easily accessible through a debit card greatly increases the potential danger. Money taken out of a 401k now could mean less money left for retirement.

The Reserve Solutions ReservePlus debit card lets employees borrow against their 401k plan by making withdrawals at ATMs, paying interest on the money withdrawn.

Link: MyFox Washington DC | New Debit Card Borrows Against 401k

^ this will be the road to ruin for many.

Originally Posted by raycarey

^ this will be the road to ruin for many.

Many Americans used their home equity as an ATM machine with HELOCS.

Now that that, is not an option, just tap into the 401K.

A lot of people are gonna be old and broke.

going to be much worse'

Famed investor Jim Rogers sees hard times ahead for the United States - and a big opportunity looming in China.

By Brian O'Keefe, senior editor


NEW YORK (Fortune) -- You might expect Jim Rogers to be gloating a little bit. After all, the famed investor has been predicting a recession in the U.S. economy for months and shorting the shares of now-tanking Wall Street investment banks for even longer. And with fears of a recession sparking both a worldwide market sell-off and emergency action from Federal Reserve chairman Ben Bernanke, Rogers again looks prescient - just as he has over the past few years as the China-driven commodities boom he predicted almost a decade ago began kicked into high gear. But when I reached him by phone in Singapore the other day there was little hint of celebration in his voice. Instead, he took a serious tone.


"I'm extremely worried," he says. "I have been for a while, but I just see things getting much worse this time around than I expected." To Rogers, a longtime Fed critic, Bernanke's decision to ride to the market's rescue with a 75-basis-point cut in the Fed's benchmark rate only a week before its scheduled meeting (at which time they cut it another 50 basis points) is the latest sign that the central bank isn't willing to provide the fiscal discipline that he thinks the economy desperately needs.


"Conceivably we could have just had recession, hard times, sliding dollar, inflation, etc., but I'm afraid it's going to be much worse," he says. "Bernanke is printing huge amounts of money. He's out of control and the Fed is out of control. We are probably going to have one of the worst recessions we've had since the Second World War. It's not a good scene."
Rogers looks

Entire: Jim Rogers: 'It's going to be much worse' - Jan. 31, 2008

The M3 Money supply is not secret. Let's just keep printing more money.

These people can't use their houses as ATMs anymore, and they refuse to cut their rampant conspicuous consumption.

bush's "ownership society" policy is to blame for a lot of the suffering that is to come....many of these people had no business purchasing the homes they are soon to foreclose on.

thankfully after the next election we'll get legitimate regulation that will protect the working class from the hypercapitalists who have made ruin of america.

So who wins in situations like this?

People with no debt, house and car paid for ... with a little loot laying around to snatch up really cheap properties? People who, when they hear the term interest rate immediately think of rates on savings and CDs rather than the mortgage interest rate on their homes?

I know it might suck for a lot of people leveraged up to their eyeballs, but surely many will benefit big-time.

Originally Posted by Texpat

So who wins in situations like this?

People with no debt, house and car paid for ... with a little loot laying around to snatch up really cheap properties? People who, when they hear the term interest rate immediately think of rates on savings and CDs rather than the mortgage interest rate on their homes?

I know it might suck for a lot of people leveraged up to their eyeballs, but surely many will benefit big-time.

I agree, it's an individual situation. I am not one of the goofs.

But there are so many there will be a trickle effect that is leaking into Macro areas. Which can affect me.

They'll probably get bailed out -- again.

The gov will float the banks, the banks will extend the mortgages and the honest guy who's been living within his means, saving to buy a house he can afford -- pays higher taxes next year.

Fcuking lovely.

Not dramatically different from the guy who saves money for his kids' education, opens mutual funds when the sprog is still shittin' his diapers and has some stashed away for when the kid enters college. What does this responsible saver get for his effort?

A higher price tag than the slob who didn't save a dime, bought houses and cars beyond his means and couldn't give a shit about his kids' education costs.

Needs-based pricing is a disincentive to save.

Originally Posted by Norton

Originally Posted by Milkman

This may be a recipe for the perfect financial storm. We'll have to wait and see.

The perfect description MM. All the factors that make for a major economic disaster are in play. Oil prices closed at $100 today with expectations they will rise further, government spending at record deficit, jobs down, inflation on the rise, consumer spending down, loan defaults and the list goes on. Hard to remain optimistic!

The M3 money supply (money printed by the Fed) is now secret. Prior to 2004 it was public info. How much is the Fed printing? We don't know.

Housing downturn tricking into other aspects of the economy. Not just the builders.

CPI and PPI

First wave of Baby Boomers hitting SS rolls now.

Medicare will be many times worse.


The American GAO (the US government's #1 accountant) is using mathematical calculations and he is telling us this.

Politicians won't dare discuss it. They won't be around anyway.

^^I'm sure glad I know so little about economics. Were I well studied in the art I think I would be a lot more disturbed than I am.

^ Here is a brief interview of the Number One guy at the American GAO. America's Accounting Office. His prediction is based upon math.

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I cannot imbed youtube, apparently. Here is the link:

Originally Posted by Milkman

I cannot imbed youtube, apparently. Here is the link:

YouTube is not a friend of my super high speed Isaan internet connection so will have to pass on the link. But thanks anyway.

The article lists specific actions taken to buffer the economy. Especially the "Helicopter" moves. How many times has the Fed and US gov done this? I've lost count.

Important to note, is that although there has bee economic expansion and increased worker productivity, wages have not only stagnated since 1999, but have actually declined in the long run.

If history is a guide, the recession of 2008 is now unavoidable.
The dismal jobs report released Friday showed overall employment to be lower than it was three months ago. Every time such a slump has occurred since the early 1970s, a recession has followed — or was already under way.
And if the good times have really ended, they were never that good to begin with. Most American households are still not earning as much annually as they did in 1999, once inflation is taken into account. Since the Census Bureau began keeping records in the 1960s, a prolonged expansion has never ended without household income having set a record.

Link: Business & Technology | Bad news piles up, points to recession | Seattle Times Newspaper

Just saw on CNN today where the overall national home debt to equity ratio has gone positive (debt higher than equity). First time since WWII!

Originally Posted by Norton

Just saw on CNN today where the overall national home debt to equity ratio has gone positive (debt higher than equity). First time since WWII!

Yes, I read that, too.

I also consistently read how "buying a home is the American dream."

Yes, home ownership is helpful financially for most, and it has many benefits, but this "American dream" concept is very foolish.

What did SK call this thread? Anyway, here's another article. Not much new, but it highlights the significance of consumer "worry" and consumer "anxiety," and how it affects the economy and can lead to self-fulfilling prophecies.

By MICHAEL M. GRYNBAUM
Published: March 26, 2008
Americans are bracing for rising unemployment and shrinking salaries, a gloomy outlook that could translate into a serious cutback in consumer spending, the primary engine of the economy.
Skip to next paragraph Related

Economic Scene: Be It Ever So Illogical: Homeowners Who Won’t Cut the Price (March 26, 2008)

Times Topics: United States Economy


The New York Times




A private survey of about 2,500 households found that Americans feel worse now about the economy’s prospects than at any time since 1973, when Americans struggled with soaring oil prices and runaway inflation.


Fears often prove overblown, of course, and this particular survey, which was released on Tuesday by the Conference Board, has a spotty track record as an indicator. But expectations can often be self-fulfilling: worried consumers are less likely to make the big purchases that help keep the economy humming.


“It signals a great deal of concern and anxiety and uncertainty among consumers,” Bernard Baumohl of the Economic Outlook Group, a research firm in Princeton, N.J., said of the survey.


“Add that to the fact that the job market has weakened dramatically, and incomes haven’t been rising very much — certainly below the pace of inflation — and you really have the ingredients of a significant cutback of consumer spending,” he said.
With home prices falling at record rates, Americans are also finding it more difficult to draw on their home equity, further depressing their spending power. A separate report on Tuesday said the value of single-family homes in major metropolitan areas plummeted 10.7 percent in January from a year earlier, the steepest annual decline since the 1990s housing slump.


“Consumer-led recessions are among the most difficult to turn around in an economy,” Mr. Baumohl said. “Particularly this one, because of the fact that many households feel a lot poorer than they did a year ago, primarily because of the collapse in the value of their homes.”

Entire: http://www.nytimes.com/2008/03/26/bu...=1&oref=slogin

What is an economy anyway? I couldn't think of a good definition, so I looked it up: A system of managing the production, distribution and consumption of goods.

I don't think the US situation is nearly as bad as many here would like us to believe. Like any good engine, there is time when it needs to spool down for maintenance or parts replacement. A recession is 2 consecutive qts of neg growth. We haven't experienced that yet. And when we do -- so what?

It's akin to buying a new rolls royce and driving it hard for 10 years without a pause and then getting pissed off, calling it a broken heap of shit, when it runs out of oil and requires a tuneup at 300,000 km.

The US economy has proven over the decades how resilient it is. Ten years from now, this sub-prime/banking "crisis" won't even be remembered.

Originally Posted by Texpat

What is an economy anyway? I couldn't think of a good definition, so I looked it up: A system of managing the production, distribution and consumption of goods.

I don't think the US situation is nearly as bad as many here would like us to believe. Like any good engine, there is time when it needs to spool down for maintenance or parts replacement. A recession is 2 consecutive qts of neg growth. We haven't experienced that yet. And when we do -- so what?

It's akin to buying a new rolls royce and driving it hard for 10 years without a pause and then getting pissed off, calling it a broken heap of shit, when it runs out of oil and requires a tuneup at 300,000 km.

The US economy has proven over the decades how resilient it is. Ten years from now, this sub-prime/banking "crisis" won't even be remembered.

I agree with your points, Tex.

I think the media get histerical about downtowns. "Gloom, doom."

Recessions/downtowns are cyclical. This will be the 10th since WWII.

The American engine is adaptable and tends to bounce back.

But here is one serious issue: Social security and Medicare

Also, declining wages and inflation and higher energy costs.

Americans will have to tighten their belts and come to the realization that things have changed. Lifestyle changes will have to follow.

Originally Posted by Texpat

The US economy has proven over the decades how resilient it is. Ten years from now, this sub-prime/banking "crisis" won't even be remembered.

Originally Posted by Milkman

Recessions/downtowns are cyclical. This will be the 10th since WWII. The American engine is adaptable and tends to bounce back.

True. How many remember the 1987 Black Monday Crash when the DJs dropped 40% in less than two weeks or the Savings and Loan crisis when over 1,000 S&Ls failed?