Thread: The strongest economy in the world

Originally Posted by raycarey

tax cuts for the uber-rich during a war that has no end in sight? insanity.

No, what's insanity is a cut & run policy certain to throw the ME into WW3.
Think your bus fare is high now?
Heh...

The price of oil would be lower if not for the ill conceived invasion of Iraq.

Even most withdrawal supporters are not advocating an immediate 'cut and run'. Providing some measure of stability on the ground, and rooting out AQ are still priorities.

But a withdrawal strategy is required, rather than an indefinite occupation with no specific stated aims as is the case now. Senator Obama has put this quite eloquently.

I'll add comments and snippets from this article when I get back from work in a couple of hours.

Can't retire, can't find job: Older workers struggle - May. 21, 2008

The following statistic is only an average, but nonetheless, I find this quite high: $8,568 in Credit Card debt.

Getting squeezed by credit card companies

Card issuers use all sorts of tactics to wrestle every penny out of customers. Here's what you need to know.

By Jessica Dickler, CNNMoney.com staff writer
May 27, 2008

NEW YORK (CNNMoney.com) -- When 53-year-old Don Cressman was struggling financially, he charged a bit more than usual on his card, but carefully watched his balance to make sure he didn't go over his limit. When he opened his credit card statement, he was shocked to find a $29 over-the-limit fee added to his bill.

"I was charged an over-limit fee when the interest charge kicked my account over my limit," said Cressman. When he called his credit card issuer to complain, they refunded the charge. "I was told that in the future I would 'just have to watch my balance,'" he recalled.

Over-the-limit fees aren't the only tactic in the credit card companies' bag of tricks. There are a slew of penalties, fees and other billing practices that can cause consumers to find themselves drowning in debt.

Americans hold $850 billion in credit card debt, and the average balance per card-holding household is $8,568, according to the Consumer Federation of America.

Link & Entire: Drowning in debt: Deceptive credit card practices - May. 27, 2008

Originally Posted by sabang

The price of oil would be lower if not for the ill conceived invasion of Iraq.

I suspect that's your bias talkin' there.

Got any facts to support it, or just a hunch?

Originally Posted by Milkman

"I was charged an over-limit fee when the interest charge kicked my account over my limit," said Cressman. When he called his credit card issuer to complain, they refunded the charge. "I was told that in the future I would 'just have to watch my balance,'" he recalled.

Serves him right. Walk on thin ice and you're going to fall through every now and then. Idiot shouldn't have a credit card to begin with.

Personally, I have no sympathy for these people. They knew what they were getting into...or perhaps they didn't. Very retarded.

Making a good living, but still feeling strapped

Consumers are feeling worse about their personal finances and prospects - far worse than government statistics about the economy would indicate.

NEW YORK (CNNMoney.com) -- Only a few years ago, Americans who considered themselves middle class were scrimping to pay for their kids' college education.

Now, many of them are struggling to cover far more basic needs - gas and groceries.

Take Stacy and Chuck Burris. The Pittsburgh, Pa., couple view themselves as solidly middle class. In recent months, however, they've felt anything but.

Burdened by high cost of food and fuel, they are having trouble balancing their budget even though Chuck Burris earns a "comfortable salary"as a software engineer. The parents of five children, three of whom are grown, have essentially stopped eating out and entertaining and are considering canceling the annual family vacation to Maine. They keep to a Spartan shopping list and have planted a larger garden. Instead of buying their 12-year-old daughter summer clothes, they are turning her pants into shorts by cutting off the legs and getting hand-me-downs from family.

Never before in previous recessions have they had to cut back like this.
"We are struggling to stay in the same place," said Stacy Burris, 47. "You don't mind pinching pennies to send your kids to college. You do mind pinching pennies when it's simply to buy some eggs."

Link and Entire: Making a good living, but still feeling strapped - May. 28, 2008

Originally Posted by Milkman

You do mind pinching pennies when it's simply to buy some eggs.

Guess the chickens have come home to roost.

Instead of buying their 12-year-old daughter summer clothes, they are turning her pants into shorts by cutting off the legs and getting hand-me-downs from family.

HORROR! Cut-off shorts? My GOD, what's become of this world? The indignity!

These people seriously need to get a grip. Why did they have five children?

The rise inumemployment was from 5.0 to 5.5%.

These unemployment numbers (U3) are often lower than the real unemployment rate. With rising fuel costs, inflation, and the housing and labor market slowing we *may* see some difficult periods for the next 18 months or more.

Anyone posting on here from the US, to give their observations and opinions?

Corporate America is getting nervous

A big spike in unemployment is the latest sign that businesses are starting to feel the pinch from the weak economy. But some see hope on the horizon.

June 6, 2008: 10:42 AM EDT

About the author
Businesses, like consumers, are starting to get much more nervous about the economy.

The significant spike in the unemployment rate in May, coupled with another month of job losses, is a certain indication that businesses are feeling the need to cut costs.

What's more, two separate reports about the health of Corporate America released today provide even more somber news about business confidence.

Entire: Corporate America is getting nervous - Jun. 6, 2008

Inflation and the interlinking of the world economy, in particular, Emerging Markets. The OP stated the US economy is the strongest in the world. True, from a GDP standpoint. China is a close #2. Who cares about GDP, when your net income is eaten up by rising prices and costs?

Get used to high prices

The Fed has a mandate to keep inflation in check. But global forces and worries about the U.S. economy will keep prices high for the foreseeable future.

By Chris Isidore, CNNMoney.com senior writer
June 12, 2008

NEW YORK (CNNMoney.com) -- For those struggling to deal with record gasoline and soaring food prices, there's bad news and more bad news.

Economists think inflation is here to stay. And it's likely to get worse.

A weak dollar and growing economies in emerging markets have conspired to send commodity prices higher. Those factors are unlikely to change anytime soon.

"We're more open to influences from the rest of the world than we were before," said Jay Bryson, international economist with Wachovia. "That does make it more challenging to keep inflation under control."

What's more, the Federal Reserve is relatively powerless to deal with many of these pressures.

"The Fed can't control prices of commodities determined in a global market," said Rich Yamarone, director of economic research at Argus Research. "If it could, it would have done so already."

Link: Don't look for relief from high prices any time soon. - Jun. 12, 2008

On another thread we read about how $10 per bushel could hit gas prices in the U.S. because there are Fed and State regs that reguire 6-10% of Ethanol to be in a gallon of U.S. gasoline. So, it's not just the food prices but also petrol prices.

Storekeeper? You around?

US floods hit food prices

By Hal Weitzman in Pike County, Illinois, and Javier Blas in London

Last updated: June 17 2008


Consumers were warned to expect even sharper increases in global food prices after US officials said that some of the country’s best farmland was facing its worst flooding for 15 years.

Agriculture officials and traders said the damage could push up worldwide corn and soyabean prices, which have spiralled in recent days as floods have swamped crops in parts of Iowa, the US’s biggest corn-producing state.

The warning comes at a time when high food prices are already sparking protests across the developing world.

Corn futures in Chicago this week rose to record highs of more than $8 a bushel on fears that up to 5m acres of the crop could be lost, while soyabean prices hit a record of $15.93 a bushel.

Tom Jennings, acting director of the Illinois Department of Agriculture, said: “The price of corn and the price of beans could rise more. If we lose a lot of corn the prices will continue to go up.”

The increase in the cost of corn and soyabeans – the two main feed crops for farm animals such as cows and chickens – increased the price of live cattle yesterday for the second day in a row, to the highest level in 22 years.

Link: FT.com / In depth - US floods hit food prices

This year's harvest of the basic commodity crops worldwide is going to be one of the most crucial events of recent years.

Originally Posted by bkkandrew

This year's harvest of the basic commodity crops worldwide is going to be one of the most crucial events of recent years.

I just and article in the "Telegraph." I think it's worthy of post but I don't know which thread to put it in yet. The article is about banking and a potential credit squeeze that could cause a crash. Some of your previous article are about this, bkkandrew. The prediction or advise is from RBS, the Royal Bank of Scotland.

It's not about the US, but it's about the world, which of course is connected to the U.S.

Link: RBS issues global stock and credit crash alert - Telegraph

^With all the recent natural disasters I'm afraid crop production is going to extremely bad. Expect food prices to really get out of hand by year end.

Originally Posted by Milkman

Originally Posted by bkkandrew

This year's harvest of the basic commodity crops worldwide is going to be one of the most crucial events of recent years.

I just and article in the "Telegraph." I think it's worthy of post but I don't know which thread to put it in yet. The article is about banking and a potential credit squeeze that could cause a crash. Some of your previous article are about this, bkkandrew. The prediction or advise is from RBS, the Royal Bank of Scotland.

It's not about the US, but it's about the world, which of course is connected to the U.S.

Link: RBS issues global stock and credit crash alert - Telegraph

I have already posted it here:

https://teakdoor.com/us-domestic-issues/27859-the-us-housing-market-deep-shit-5.html#post661497

By Neil Irwin
Washington Post
June 18, 2008

Ask Americans how the economy is doing, and their answer is stark: It is not just bad, it is run-for-the-hills terrible. Consumer confidence is at its lowest level in almost 30 years. Only 12 percent of Americans think the economy is in good shape. On the Internet, comparisons to the Great Depression are widespread.

But the reality is different. According to most broad measures of how the economy is doing, it's not all that grim.

Soft? You betcha. In recession? Quite possibly. And a crisis in the financial markets has rattled nerves for months now. But so far, the economy is holding up better than it did during the last two recessions in 1990 and 2001. Employers haven't shed as many jobs, the unemployment rate is still relatively low, and gross domestic product has kept rising. Things are nowhere near as bad as they were in the Great Depression, or even during the severe recession of 1982-83.

The last time consumers were this miserable, in May 1980, the jobless rate was 7.5 percent and inflation was 14.4 percent. Now those numbers are 5.5 percent and 4.2 percent respectively.

This paradox has created a unique challenge for those guiding the economy, who worry that Americans' pessimistic views will become a self-fulfilling prophecy. Two-thirds of the economy is consumer spending. So if people's negative outlook leads them to cut their spending, a steeper downturn could happen.

This has left economists trying to figure out why Americans' perceptions are so much more negative than the data analysts use to measure how things are going.

"We're saying that we feel a lot worse than we did at the depths of the last recession, when we had had 2 or 3 million job losses, that we feel worse than we did after 9/11," said William Cheney, chief economist of John Hancock Financial Services. "At some level, that just doesn't make a whole lot of sense."
But through the prism of daily experience, it may.

The run-up in gasoline and food prices, for example, appears to affect people's perception of how they're doing more than a similar price rise in other goods.

Eric J. Johnson, who studies behavioral economics at Columbia Business School, offers this example: Someone who has to pay an extra $25 to fill up his car is reminded of that cost once a week -- or more often if you count the times he is driving down the road and sees the $4 per gallon price in giant numbers on a sign. Technically, he is no worse off than if his rent had increased by $100 a month. But it feels a lot worse.

"Things that you buy more frequently and that have large percentage increases will weigh more in people's perception of inflation," Johnson said.

Not only that, but increases in the price of gasoline and food affect almost everyone.

"If the unemployment rate goes from 5 to 7 percent, that affects 2 percent of the population," said Michael Feroli, an economist at J.P. Morgan Chase. "If gas prices go up, almost 100 percent of the population feels terrible."

Another possibility: Americans have been unnerved by the financial crisis that was a major cause of this broader economic slowdown. The credit crisis has spilled from one part of the financial markets to another. At times, the wheels of global capitalism have appeared to be at risk of coming off.

Although trouble in the financial sector is not the same as a generalized disorder of the economy, ordinary Americans may not make that distinction.

Another factor is that homes are losing value -- and this reduces the wealth of more people than a plummeting stock market like that of 2001. Currently, 68 percent of Americans own their home. In 2001, only 21 percent owned stocks directly.

Moreover, housing values literally hit closer to home. A person's stock holdings can seem like a paper abstraction. But the value of the four walls that a person calls home is more tangible and can seem more secure even though it may be every bit as volatile.

Wellesley College economist Karl E. Case and two co-authors researched how changes in the value of homes affect what people spend and got a curious result: When home prices are rising, people spend more money. When they are dropping, they don't spend less money. With stocks and other assets, by contrast, spending both rises and falls with prices.

"People spend more when house prices go up and worry more when prices go down, but don't actually spend much less," Case said. "That could explain why consumer spending numbers have been much more robust than you would expect if you look at consumer sentiment."

Some analysts attribute Americans' negative views on the economy to media coverage, which tends to play bad news more prominently than good news. There is ample research proving that, say, a drop in the stock market or rise in the unemployment rate gets more extensive news coverage than a move in the reverse direction. (In other news, newspapers tend to cover plane crashes more extensively than a safe landings).

But that has been true during past downturns. There is no obvious reason that it would be more pronounced now than in 2001 or 1990, when consumer confidence did not drop as much as it has recently.

The biggest reason for people's gloom might be because of what they're used to. In the 1980s and '90s, memories of the double-digit unemployment and double-digit inflation from the 1970s were still fresh.

"People expected very little out of the economy," said Richard Curtin, who has administered the University of Michigan's survey of consumer sentiment for 35 years. "Compared to what their frame of reference was, the performance of the economy was absolutely tremendous."

But now, coming off two decades of prosperity and low inflation, Americans have come to treat low unemployment and inflation as givens. We have gotten so used to things being good, in other words, that even when conditions become somewhat bad, it feels terrible.

***

The last two paragraphs of this story sum up my feelings. It's only a crisis when compared to the past 15 years of overall prosperity. People aren't looking at this with a historical view. That's a mistake. They've become soft and been conditioned to expect neverending gains and everlasting increases in wealth.

It don't work like that.

Originally Posted by Bugs

Just think of the hysteria of the general population. Crying about how their nest eggs where being eliminated - they no doubt would be calling for the government to step up and compensate them for the losses.

Yeah, that would quickly drain government funds.
There would be nothing left to use for compensating banks when they make losses.

Originally Posted by Texpat

By Neil Irwin
Washington Post
June 18, 2008

Ask Americans how the economy is doing, and their answer is stark: It is not just bad, it is run-for-the-hills terrible. Consumer confidence is at its lowest level in almost 30 years. Only 12 percent of Americans think the economy is in good shape. On the Internet, comparisons to the Great Depression are widespread.

But the reality is different. According to most broad measures of how the economy is doing, it's not all that grim.

The article (which I also read this morning) hit on good points about people's perceptions.

Yeah, the more frequently you buy a product that's going up in price, the more you will perceive it to be: $25 extra per week = $100 more for gas, but an increase of $100 you pay once a month is the same, but not perceived as negatively as the gas. Also, driving down the road and seeing the gas prices posted on signs at stations.

However....I do think Dr. Elizabeth Warren is correct. She wrote a book called "the two-income trap," and went on a speaking tour. You can youtube Warren, and I quite sure I put her youtube 1-hour presentation on a thread here in U.S. Domestic.

Starting in 1970, Americans fixed expenses (thing you have to pay for) started increasing while income declined. Tax rates have also risen.

The increase in the cost of housing eats a higher percentage of Americans net now, than say, 30 years ago.

So, based upon mathematics, Americans are slipping down, and they have been for 38 years, starting in 1970.

But I do agree, that perceiving "gloom and doom" is not necessary.

Originally Posted by Milkman

Originally Posted by Texpat

By Neil Irwin
Washington Post
June 18, 2008

Ask Americans how the economy is doing, and their answer is stark: It is not just bad, it is run-for-the-hills terrible. Consumer confidence is at its lowest level in almost 30 years. Only 12 percent of Americans think the economy is in good shape. On the Internet, comparisons to the Great Depression are widespread.

But the reality is different. According to most broad measures of how the economy is doing, it's not all that grim.

The article (which I also read this morning) hit on good points about people's perceptions.


Yeah, the more frequently you buy a product that's going up in price, the more you will perceive it to be: $25 extra per week = $100 more for gas, but an increase of $100 you pay once a month is the same, but not perceived as negatively as the gas. Also, driving down the road and seeing the gas prices posted on signs at stations.

However....I do think Dr. Elizabeth Warren is correct. She wrote a book called "the two-income trap," and went on a speaking tour. You can youtube Warren, and I quite sure I put her youtube 1-hour presentation on a thread here in U.S. Domestic.

Starting in 1970, Americans fixed expenses (thing you have to pay for) started increasing while income declined. Tax rates have also risen.

The increase in the cost of housing eats a higher percentage of Americans net now, than say, 30 years ago.

So, based upon mathematics, Americans are slipping down, and they have been for 38 years, starting in 1970.

But I do agree, that perceiving "gloom and doom" is not necessary.

The Yanks have been riding on the backs of the rest of the world for decades due to the Yanky $ world hegemony. That is, the Yankee $ has been overpriced on the world market as a result of the fact that it has been sought after as the main trading medium for commodities on the world market. Almost every country buys $USs as a back up to the purchasing power of needed commodities which are almost always priced in $USs. eg: oil.

This un-natural demand for $USs has inflated the value of the $US about 20% above what it should be trading at in a free market system.

The world markets are gradually moving away from the $US as the worlds default trading currency, so USA is increasingly having to rely on actual production of goods and services to meet the shortfall. Hence the current devaluation of the $US. Unfortunately for all of us, the current US government is borrowing against the perceived value of the $US in order to meet the shortfall in tradable goods and services. the whole "New American Century" neo-con deal relies on the $US as the worlds main tradable currency for goods and services, especially oil.

Its all a big con job. USA used to be a power house of production to the world. But it is no more. USA is now a consumer nation importing more than it exports. The only thing that keeps it afloat is its increasing world debt and reinvestment back into the USA by countries like Saudi Arabia, based on the fallacy of ever increasing value of the $US.

Sad as it may seem to most Americans here, USA has reached its peak in purchasing power of the $US. America has a big debt to pay off and a less big trade imbalance to get sorted out. But by far the biggest hurdle for Yanks living overseas and American companies is going to be the devaluation of the $US as the rest of the world moves away from the $US as the worlds default trading currency. Its not going to happen overnight, but the gradual shift is on right now and has been for a few years.

As I have said before, it wont be all bad news for the average American worker.
Exports will become more competitive and that will boost the job market and in turn wages. Bad news is for big companies playing on the world market and expats counting on the power of the $US for a retirement income.

I know there are many here who believe (hope). that nothing will change and the world will stay the same forever. I wish them well.

At latest observation the dollar was up around 33.5 baht to one dollar, from about 31.5 a month ago...

120 dayslatest (Jun 20)
0.639959lowest (Apr 22)
0.62461highest (Feb 7)
0.689893

Every currency is looking better compared to the Thai Baht.
Try comparing the $US to major world currencies to get a true picture.