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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.

Milkman

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.

Texpat

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.

Norton

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!

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Milkman

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.

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Norton

^^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.

Milkman

^ 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:

Norton

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

Milkman

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.

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

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!

Milkman

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.

Milkman

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.



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

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.

Milkman

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.

Norton

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?

Texpat

Also the world is much different today than it was 15 years ago. I couldn't be sitting here chatting with someone in the US or Africa from my home in Thailand in '93. Demographics are changing faster and faster because of ease of mobility and the world is a much smaller place. Economies are far more integrated today.

The scope of problems though is far smaller than it was in the 40s or 70s for example. People like to believe they're living in The Moment. What's happening in the world now is IMPORTANT. Well, in my opinion, it ain't. Comparatively.

Milkman

Here's a lecture with powerpoint by Elizabeth Warren. Lots of data by both government statistic sources and private research.

This is happening, and it will continue. No, this is not negative or gloom & doom. But it is reality.

Jet Gorgon

^ It's OK. I'm poor anyway so it won't affect me.

Milkman