It must be a Depression

[MrFixIt]

imotion, very thoughtfull post. Couple things...

Originally Posted by imotion s14

The path the country has chosen to go down is massive deficit spending during a recession

According to the prevailing economic school of thought, one way to pull an economy out of a recession/depression is through what's called expansionary fiscal policy. Basically having the government spend a bunch of money on projects (Common example: The public infrastructure projects done under FDR (Interstate highway system, Hoover dam, etc...). Now, that's not to say that any government spending is usefull. The key is to invest in projects and infrastructure that can help our nation become more efficient and productive in the future. Simply racking up a huge debt fighting a war will not by itself help the situation.

Originally Posted by imotion s14

No one wants to manufacture anything because that means factory jobs instead of borrowing money to buy houses and flipping it for profit. We don't need bubble economies. We need a real economy, we need to save, we need to stop living beyond our means and we need to manufacture things to sell.

Couldn't agree with you more. As our manufacturing sectors have been slowly phased out, we have more and more become an economy based on secondary goods and services (roughly 30%), such as insurance, consulting, and financial services. Basically we have built an economy based on people moving money around. While this is great and all, and certainly has a place within the economy, I beleive that there is a disproportionate number of people and resources devoted solely to day trading fucking wheat futures in lebanon to try score a quick grand or two.

I was kind of an econ nut in highschool. Forgive me

[HalveBlue]

Originally Posted by Gnnr

Oh really? Where'd you get that from? Wikipedia? Because I've actually read studies and seen documentaries on it. The craze really began in 98 and what was happening before was the humble beginnings of it...prove me wrong though, I always like to learn more.

Actually you are right. The internet bubble didn't start in 1995, the increase in tech stock did. The bubble was a result of the success of internet based corporations which started in the mid-90's.

With that said, imotion is spot on, on everything else.

According to some economists, this "bailout" program has a tally of close to 8 trillion dollars!

8 trillions dollar we don't have, I might add.

The banking crisis of last year allegedly wiped out two trillion dollars worth of capital. That's just under 15% of the the U.S.'s 2007 GDP.

So not only did our economy shrink a huge percentage but our government is now spending enormous sums of money on top of that.

Imagine if every single person in the US quit working, buying, trading, etc. for an entire year. That's how much money we're in debt.

We're so fucked it's not even funny.

[theicecreamdan]

I don't have a job...

[sillyvia13]

Me either... been homeless for 6 months

Originally Posted by theicecreamdan

I don't have a job...

george4title - george4title Live - blogTV this guy lives in tent city... George good guy. I feel for him

[SexPanda]

I was in New Orleans a few days back, and a couple homeless guys asked for some change to buy alcohol and drugs. I was shocked by their honesty. So I gave them my pocketful of 1.30ish worth of change and wished them a good day.

It felt good to help the homeless lol.

In all honesty... Change is nice and all... But change costs money, and we really don't have alot of money right now. So look for an increase in taxes across the board, prolly more for the "rich" then us 20k a year living with our parents stealing the used tires from behind Firestone crowd lol.

Clean energy? LMAO. Yeah, lets pull some windmills out of our ass and make America self-sufficient! That'll cost a pretty penny.
Healthcare for the unemployed? Honestly, there are always jobs, just some of them are less "respectful" then others. If I had to support a family, pay a mortgage and other bills, and still save money, and I'd been laid off of my 60k a year job, you'd be rest assured that I'd be working at McD's and Burgerking 60 hours a week yo. And my wife would be working too. It'd be hecktic, but its better than being homeless.

I see a huge cut in defence spending coming up soon. I might be wrong, but I would almost bet money Im right. Who needs an army, right? Navy? Thats a shade of blue. Marine? What about the water?

[Gnnr]

Originally Posted by HalveBlue

We're so fucked it's not even funny.

Ehh, either I'm naive, or an optimist, or skeptical, or people cried wolf to many times. I don't know. But I'll believe we're fucked when I see these doomsday predictions come true. lol. Maybe America has become too pussy. Oh crap, I can't get a loan. The world is over. I bet people from the 30s sucked it up and kept it moving. random thought. Hmm, maybe I should go see Cinderella Man again...

[neverrain]

Originally Posted by Gnnr

I bet people from the 30s sucked it up and kept it moving

Then they jumped out of buildings. Unfortunately, the pussification of America has placed safety restrictions on everything, so now the people who want to jump out of buildings can't because their office window is triple thick and doesn't open.

That IKEA desk chair will never break through that glass.

[HalveBlue]

Originally Posted by Gnnr

Ehh, either I'm naive, or an optimist, or skeptical, or people cried wolf to many times. I don't know. But I'll believe we're fucked when I see these doomsday predictions come true. lol. Maybe America has become too pussy. Oh crap, I can't get a loan. The world is over. I bet people from the 30s sucked it up and kept it moving. random thought. Hmm, maybe I should go see Cinderella Man again...

Fair enough.

However, I think if you studied economics a little more closely you'd realize the serious and complex shit we're in.

Keep in mind, in 2008 the estimated U.S. GDP decreased around 2 trillion dollars from the previous years GDP. That's just a hair under 15%.

The Great Depressioin saw GDP decline from over 800 billion dollars in 1929, to just over 600 billion dollars in 1932. The U.S. effectively lost 1/4 of it's GDP in three years, with an average rate of ~8% per year. We lost almost twice that much last year alone.

Also, always remember that market corrections aren't instantaneous. That means the effects of a lot of stuff that's happening now won't become apparent for at least another 3 months.

The state of our economy today imitates quite closely the state of the economy in 1929, if you believe some economists (including Fed Reserve Chairman Ben Bernanke).

I hope you're right, and this thing just blow over.

I really doubt it though.

[sillyvia13]

Well the great Depression was said to look like a late car payment compaired to what we are in for...

All I know is...
I am not happy with my future.
Take care of your self now and prepare for the worst.
If not your ready anyway. "better safe than sorry" Your gonna have to take care of your entire fam.

as for percentage of unemployed.
The self employed, do not make it to that list, the business owners don't make it to that list.
only employees of a company with xx workers.
Imagine how many illegal business went under! ... just sayin.

[HalveBlue]

Who's down for investment strategy talk?

I'm down with gold, coke, and pharmaceutical and medical companies.

[Gnnr]

Originally Posted by HalveBlue

Fair enough.

However, I think if you studied economics a little more closely you'd realize the serious and complex shit we're in.

Keep in mind, in 2008 the estimated U.S. GDP decreased around 2 trillion dollars from the previous years GDP. That's just a hair under 15%.

The Great Depressioin saw GDP decline from over 800 billion dollars in 1929, to just over 600 billion dollars in 1932. The U.S. effectively lost 1/4 of it's GDP in three years, with an average rate of ~8% per year. We lost almost twice that much last year alone.

Also, always remember that market corrections aren't instantaneous. That means the effects of a lot of stuff that's happening now won't become apparent for at least another 3 months.

The state of our economy today imitates quite closely the state of the economy in 1929, if you believe some economists (including Fed Reserve Chairman Ben Bernanke).

I hope you're right, and this thing just blow over.

I really doubt it though.

I don't know it all. But I know more than that. Its in the area I'm studying for (BBA/MIS).

What I've gathered from all this is this. We know a LOT more than we did back then. We did many things during the depression to make it worse (the government cutting spending and tightening budgets for instance, when it should have been pumping money into the system is one example). Economic principles we know very well today where barely recognized then. Regulation was almost non-existent. Back then they labeled everything a "panic" and thought that things like unemployment would fix itself. There are too many things in place, things that didn't exist or we didn't know about then, for it to happen again.

Bleehhh, like I said. I'll believe the sky is falling when it happens.

[sillyvia13]

fiat money = fail.
Simple.

Gold based money = win.

Back our money with legit currency.
Dude when the sky falls. dont look to stock food and shit then.
You'll be with the rest of the none believers

[codyace]

Originally Posted by sillyvia13

fiat money = fail.
Simple.

Gold based money = win.

Back our money with legit currency.
Dude when the sky falls. dont look to stock food and shit then.
You'll be with the rest of the none believers

Going back to a gold based system would put us right back into the upper 5 percent of rich people....and the rest of us slugs...It's a great idea on paper, but would crush the global economy. The Fiat (fractional reserve) system works just fine, as long as everyone plays by the rule and respects the system....but I guess that holds true for everything in life....





I know it may not be much, but I often wonder what our actual federal deficit would be if we were to 'collect' from all of the countries that owe us money....I find it interesting that people are quick to claim that we owe XXX country XXX money, but fail to bring up the fact that country YYY has owed us YYY for much longer....


FWIW: While we may have the same symptoms has post war economies in our past, and the great depression, we have COUNTLESS more systems and balances in place now to prevent such a thing from happening....that is not to say it's impossible, but certainly not as easy for it happen as it has in the past.

[ZenkiKid]

its weird, tonight was the first time i went to the mall in ages and a bunch of the stores are having closing sales, its starting to seem as if you arent really a corporate owned store you wont last nowadays

[sillyvia13]

YouTube - Obama's Puppetmaster

listen closely, if you think you missed it watch again.
Very Interesting.

[KA24DESOneThree]

It's not a depression, yet.

It will become one. Then, you'll all be looking at the person you're supposed to listen to because "it's the path we chose" and he'll be panicking. Have you ever seen a deer frozen in a car's headlights? That'll be Obama. He'll be left with a stack of bills amassed by this White House.

We might as well have given our country some concrete shoes, and the water's rising.

Besides, the economy isn't even our biggest issue. Our biggest issue is the constant erosion of our civil liberties, and Obama, our saviour, our very own black jesus, contributed. Without freedom, a working economy is pointless.

[Gnnr]

LMFAO! This is why I can't take the comments on this board seriously. The man isn't even president yet.

The internet is serious business yo!

[HyperTek]

even the video game guys are seeing a bad time, this guy just got fired from Eidos *i guess he worked on the last tomb raider game* and hes talkin about how the guys who work hard got fired, and the higher ups are just buying ferraris and chilling on millions without doing much input, and how tomb raider underworld didnt meet their expectations, but how the guys who made the decisions about releasing that game early/pushing it out still have their jobs etc..

I'm one of the 30 who got fired by Eidos, ask away - www.tombraiderforums.com

[imotion s14]

Originally Posted by ronmcdon

Lol, I'm not so sure that all government intervention is bad, but I'd like to think that some are more disastrous than others.

It almost always is when it comes to the economy.

In the 2008 financial crisis, I'm more convinced the culprit was poor regulation of sub-prime loans instead of insufficient regulation of the overall economy.

That's like saying "if only we regulated people walking off cliffs". The government could have regulated it. But that was not politically palatable.

Fannie and Freddie's political goal was to give low income earners a chance to own homes and meet lending quotas for HUD. Lending standards went out the window because government interfered in housing. Economic reality took a back seat to political pandering.

I have no problem with government acts that encourage lending that was otherwise restricted to racial factors. If you have $ and a sufficient credit history, I'm not sure why it makes sense to discriminate lending based on race and other non-financial factors. However, I do think it's questionable to lend $$$ out to lower-middle income households that cannot realistically pay it off. economic policy and being PC about class discrimination shouldn't be mixed together.

They we're just encouraging home ownership, they had their hands all over it. They chartered Fannie and Freddie, they made it possible for theses high risk loans possible. Home ownership is a HUGE financial commitment. It takes financially disciplined people to be homeowners.

If regulation has to be put in effect, address the source of the problem. prohibit junk loans entirely. I'm not convinced that anything will be solved by regulating any other part of the economy.

And who was it that were purchasing those junk mortgages?

Good ole government chartered, Freddie and Fannie. Government's commitment to making sure every American had a chance to own a house, financial stability and credit worthiness be damned.

Like I said.. there is the politics and economic reality.

Originally Posted by Gnnr

Oh really? Where'd you get that from? Wikipedia? Because I've actually read studies and seen documentaries on it. The craze really began in 98 and what was happening before was the humble beginnings of it...prove me wrong though, I always like to learn more.

I got it from the WSJ.

Portals - WSJ.com

Originally Posted by MrFixIt

imotion, very thoughtfull post. Couple things...

According to the prevailing economic school of thought, one way to pull an economy out of a recession/depression is through what's called expansionary fiscal policy.

Milton Friedman destroyed the very basis of Keynes' general theory and proved it in the 70s. Why are we still following that non-sense?

Basically having the government spend a bunch of money on projects (Common example: The public infrastructure projects done under FDR (Interstate highway system, Hoover dam, etc...). Now, that's not to say that any government spending is usefull. The key is to invest in projects and infrastructure that can help our nation become more efficient and productive in the future. Simply racking up a huge debt fighting a war will not by itself help the situation.

Keynesian theory is that the government should run up a deficit to put money into the hands of people, in theory the people would take that money and spend it and circulate it int he economy to creating aggregate demand.

But this falls flat on it's face because it doesn't take into account where the money comes from. Government has no real wealth, they don't create things, merely re-distributes what it takes/borrows.

For government to stimulate the economy they have to take from the economy or borrow it. They say that it would be a boost to consumer spending instead of letting cash sit idle.

BUT!

Where do we all keep our money?

The bank.

Money in the bank as you know does not sit idle. It's invested back into the economy.

AHA! But in this kind of economic environment, banks won't loan!

To that I say what ever stimulus we get in this type of economic environment we're more then likely to save it, so the money goes into the bank anyway.

Japan spent trillions of yen to revive their asset bubble in the 90s, public works, propping up failed businesses. They cut rates, just massive government stimuli packages and what did it achieve?

Nothing, they have never fully recovered from that. All that resources was misdirected and wasted instead of being spent on boosting economic productivity.

Politicians generally don't know dick about the economy and we're saying they should be directing the economy during times of recession? That makes no sense to me, the market will correct itself, that means we have to let people face the consequences of their actions.

That's the very source of the problem is that we refuse to let people fail because it's not politically palatable to do so. If we let them fail, the people who are competent takes over the resource and make better use of it.

Instead we bailout and prop up failures and tell them they are too big to fail and create a moral hazard where they have a perverse incentive to take bigger risk because they know down the line they will get bailed out.

The problem with public works is it doesn't create productive work and it's a shitty investment. It's work just to work and it produces absolutely nothing and takes away resources for a real recovery.

Couldn't agree with you more. As our manufacturing sectors have been slowly phased out, we have more and more become an economy based on secondary goods and services (roughly 30%), such as insurance, consulting, and financial services. Basically we have built an economy based on people moving money around. While this is great and all, and certainly has a place within the economy, I beleive that there is a disproportionate number of people and resources devoted solely to day trading fucking wheat futures in lebanon to try score a quick grand or two.

I was kind of an econ nut in highschool. Forgive me

Well that's my point, the whole recession is like a fever for our economy. The fever is just a symptom that tells us our body is working to destroy the sickness.

The sickness being our debt-based consumption and service economy. We became a world economic power because of our manufacturing and savings. Over the last 20 or so years we became an economy that needed unlimited amounts of credit to keep our bubble economy going.

That just isn't possible. What the government wants to do is get rid of the fever because they think the symptom is the problem when it's actually the solution.

Originally Posted by Gnnr

Ehh, either I'm naive, or an optimist, or skeptical, or people cried wolf to many times. I don't know. But I'll believe we're fucked when I see these doomsday predictions come true. lol. Maybe America has become too pussy. Oh crap, I can't get a loan. The world is over. I bet people from the 30s sucked it up and kept it moving. random thought. Hmm, maybe I should go see Cinderella Man again...

The writing is on the wall. If you don't want to see it, refuse to see it then oh well.

The Feds announced they are buying up unlimited bonds in the future.. BAM bond market rallies out of nowhere. Risk free profit for bond speculators looking to short government bonds in the near future. No one is buying bonds to hold to maturity. It's all speculation because the Feds put it all out in the open EXACTLY what they are going to do.

They're not trying to hide the fact they are trying to re-inflate the bubble. They're doing it by running up massive deficit.. yet you see absolutely NOTHING wrong?

Oh I forget you're a Keynesian, government is suppose to run up huge deficits.

Originally Posted by HalveBlue

Who's down for investment strategy talk?

I'm down with gold, coke, and pharmaceutical and medical companies.

I'm down! I wish I had the money to grab some stocks tho.. really once in a lifetime opportunity to get some really good stocks with good yields.

Originally Posted by Gnnr

I don't know it all. But I know more than that. Its in the area I'm studying for (BBA/MIS).

What I've gathered from all this is this. We know a LOT more than we did back then. We did many things during the depression to make it worse (the government cutting spending and tightening budgets for instance, when it should have been pumping money into the system is one example).

Governmentspent massive amounts of money, Hoover up until then had spent more then any president before him. In fact FDR ran on a platform accusing him of such. :lol

Japan pumped hundreds of trillions of yen when their asset bubble burst to prop up failing banks,companies and massive public works. The 1990s was their "lost decade" for them. Even to this day they haven't fully recovered from that. The Nikkei is nowhere near the dizzying heights it was at during their bubble days.

[qoute]Economic principles we know very well today where barely recognized then. Regulation was almost non-existent. Back then they labeled everything a "panic" and thought that things like unemployment would fix itself. There are too many things in place, things that didn't exist or we didn't know about then, for it to happen again.

The market was fixing itself, unemployment was at a ~9%. But then came the government to solve everything. Smooth-Hawley was passed because they wanted to make it so people would buy domestic goods. That would solve the nagging unemployment by creating more demand for domestic goods thus solving the unemployment issue! All it did was ignite a huge trade war because trade is a 2 way street. Now American companies were cut off from a world market and unemployment shot up rapidly.

Bleehhh, like I said. I'll believe the sky is falling when it happens.

it's happening, but like I said you're a mainstreamer, a Keynesian so everything the government is doing is correct in your view.

Originally Posted by codyace

Going back to a gold based system would put us right back into the upper 5 percent of rich people....and the rest of us slugs...

How do you figure? it's the poor people who are better off with a gold standard. The dollar you make today won't buy a dollars worth in the future. Unless you think inflation is a good thing. I think of it as a hidden tax.

It's a great idea on paper, but would crush the global economy. The Fiat (fractional reserve) system works just fine, as long as everyone plays by the rule and respects the system....but I guess that holds true for everything in life....

Fiat Currency and Fractional Reserve Banking are 2 separate beast.

Fiat currency is currency that has value because the issuing government says worth and not because of intrinsic value.

Fractional Reserve Banking is the practice of keeping only a fraction of deposits on hand and loaning out the rest hoping that all the depositors (or a significant number of them) don't come to claim their deposits at.

I know it may not be much, but I often wonder what our actual federal deficit would be if we were to 'collect' from all of the countries that owe us money....I find it interesting that people are quick to claim that we owe XXX country XXX money, but fail to bring up the fact that country YYY has owed us YYY for much longer....

It won't add up to any where near what we owe. I looked it up and the us was a net creditor of something like 3 billion in the mid 80s. Now we owe something like ~11 trillion.

FWIW: While we may have the same symptoms has post war economies in our past, and the great depression, we have COUNTLESS more systems and balances in place now to prevent such a thing from happening....that is not to say it's impossible, but certainly not as easy for it happen as it has in the past.

Well they aren't hiding the fact they are gonna run the printing presses. What else can they do? The interest rates can't get any lower, The supply of money has done nothing BUT increase.

Their idea is to buy time and run up huge deficits in hopes of reviving the bubble economy and then pay it off later on, like the fat guy who keeps saying next week he'll get on a diet.

Never mind that the economy they thought was so good was 2/3rds consumption with borrowed money. I mean it doesn't take a rocket science to see it's a giant ponzi scheme of finding the next sucker to buy up our debt.

I think the countries who lend us money are know realizing somewhat that we're never going to pay them back. The only reason we haven't totally collapse is because people still have the perception that we're good for it.

Originally Posted by KA24DESOneThree

It's not a depression, yet.

It will become one. Then, you'll all be looking at the person you're supposed to listen to because "it's the path we chose" and he'll be panicking. Have you ever seen a deer frozen in a car's headlights? That'll be Obama. He'll be left with a stack of bills amassed by this White House.

We might as well have given our country some concrete shoes, and the water's rising.

Besides, the economy isn't even our biggest issue. Our biggest issue is the constant erosion of our civil liberties, and Obama, our saviour, our very own black jesus, contributed. Without freedom, a working economy is pointless.

Economic liberty IS individual liberty.

Originally Posted by Gnnr

LMFAO! This is why I can't take the comments on this board seriously. The man isn't even president yet.

The internet is serious business yo!

I don't know about that video, but he's already broadcast to the world what he intends to do. He's going to run up the deficit, because in the short run that doesn't matter, we need to ease the pain now and by dig ourselves further into a hole. We can't take the pain now.. yet these clowns in charge promise we'll eventually do it.. when the pain is much more severe down the line? It makes absolutely no sense.