Why do so many here believe that the next Great Depression is always around the corner?

Even by the standards of the pre-New Deal economy, the Great Depression is a bit of an anomaly. Things like a more vibrant central bank, deposit insurance, and a whole bevy of financial regulations make another Great Depression quite unlikely. Economics, my field of study, is hardly a perfected field, but huge strides have been made. There are certain things we know now that we never used to.

For example, we used to think that above all else the government needed to run a budget surplus and the central bank had to keep money tight in a downturn to preserve the integrity of the dollar. We now know that is folly.

The Federal Reserve used to think that when interest rates went up due to inflation, it was wise to increase the money supply to reduce interest rates. Well, that was a horrid idea as it led to incidents like the 1970s inflationary outbreaks. We will never make that mistake again, at least intentionally.

Also, contrary to popular belief, stock market crashes do not cause recessions or Depressions. The stock market crash of 1929 did not cause the Great Depression. Anyone who has studied the Depression knows that the economy was already clearly deteriorating and that the stock market's October crash was merely an indication, not a cause, of the economy's malaise. Now it is true that unregulated banks did own stocks in their asset portfolios. We don't allow that anymore. However, it is important to point out that by April of 1930, the Dow Jones Industrial Average had nearly wiped out its losses from October. This did not either cause an economic recovery, nor did it indicate one. The stock market can move entirely on its own.

I honestly think people here have apocalyptic views of the American economy as if it is somehow pre-ordained that the whole economy will contract to 0 at some point. The truth is that this economy is very resilient. Even in severe recessionary years since WWII, the GDP has almost never contracted more than 2%, if it ever has. Will these be difficult times? Oh yes. Is this probably going to be worse than 2001? Maybe. Will the stock market decline more than 2000-2002? Most likely not. Will your bank go under? 99.95% likelihood that it won't and even if it does it will simply be bought up by another bank and your deposits will be safe.

A lot of people will suffer, but it will be a modest recession by historical standards.

Many countries have actually gone decades without recession. I think Taiwan for example managed something like 20 years without one. They are not inevitable nor are they destined to be massive.

...the personal debt bubble paired with a massive home equity adjustment will be far more destructive to the economy than the collapse of the tech bubble was, and the markets sense this.

What innovation or gimmick do you suppose will pull us out of this one?

We had phenomenal real productivity growth from the early 1990s to the late 1990s. There was nothing fake about it. That is the normal conduct of the economy. Also, debt to income ratios are not appreciably higher than they were in the 1990s. I dispute your entire premise.

It means employers were able to squeeze more work out of fewer workers for less money. It's great for stockholders but doesn't translate to better living standards for the average working person.

The 90's didn't reverse the long decline of working people and the middle class in this country, they just represented a slight slowing of the bleeding.



And although householdl debt was quite high in the latter half of the 90's, it's MUCH higher now.


http://www.safehaven.com/article-4801.htm






The article is a couple of years old, but thill holds true, as household debt has yet to be paid down to any meaningful degree.

In fact, the hideous bankruptcy law passed in 2005 will only make things worse, since people who WOULD have been able to declare bankruptcy and keep their homes will now be forced in many cases to simply default, leaving the lenders holding a bunch of rapidly devaluing properties.

Without corresponding increases in salaries for a broad population of typical workers (not just soaring salaries at the top deceptively jacking up the median income), there can't be any sort of real growth that benefits the majority of people. The so-called growth of the last 7 years is the perfect example. The average family is much worse-off financially that ney were in 2001, and once the real-estate correction has run it's course, they'll be even worse off because in many cases, their home will be worth less than their mortgage balance, making the home equity loans that were the mainstay of 2000's consumer spending an impossibility.

It goes from 10.5% to 14%, making moves above 10 appear ginormous(to use my favorite non-word). I do not deny Americans are too highly leveraged, but this is able to be resolved without calamity.

And the fact is that late-90's debt/income ratios were already at historic highs and personal savings at record lows.

All of this is unprecedented in US history, but you just pooh-pooh it because all that seems to matter to you is corporate P/E ratios and valuations and stock prices.

At the height of the latest so-called "boom" a huge number of people were already struggling.

Why is that part of the economic picture so irrelevant to you?

Let's say the trends continue, and the ranks of millionaires and the destitute continue to swell to the point that there is no longer any meaningful middle class, with 80% of the country in $8-10/hour jobs and the rest in 6-figure jobs, with 5% unemployment and a roaring stock market - would that be a prosperous country in your mind?

Not to me...

It is hardly something beyond comprehension.

I looked at the Federal Reserve data. Time and again the debt service ratio can fall by up to 1.5% and not mean an economic catastrophe. http://www.federalreserve.gov/releases/housedebt/

Don't just look at debt service - the overall debt load is significantly higher, even though payments in some cases may be low (for now).

And you totally ignored the rest of my post - nice.

http://www.federalreserve.gov/releases/housedebt/

An economist can only look at data. Yes, we are addicted to debt, however debt is easier to service than it was in the 1970s and 1980s due to lower interest rates. The current interest rates are much closer to historical norms than exceptions. The 1970s through 1980s were the exception and they have been falling ever since. This distorts people's perceptions of history. However, look at the 1900s through 1960s. Interest rates were much more in keeping with the 1990s than the 1970s.

Edit: My point is that consumers seem to be able to handle 12% of income going to debt service fairly readily. Is it painful for them? Most certainly, but the morality of this is not the point of my analysis. My point is I see no mechanism by which we lapse into a Depression. Even a credit contraction to more recent historical norms would not do that.

But there are scenarios where interest rates rise, regardless of what the fed does...

http://www.oftwominds.com/blog.html



How the U.S. Could End Up with High Interest Rates

January 16, 2008

Everywhere you turn, the pundits' predictions are unanimously for "much lower interest rates." Aren't you a little skeptical of any "received wisdom" on which the pundits all agree? I certainly am, as history has time and again thumbed its nose at collective certainty by swerving in the exact opposite direction of what was unanimously predicted as a "sure bet."

Low interest rates are supposed to calm the recessionary waters by invigorating the sagging housing market. Sure, lower rates make everything from corporate debt to new auto loans cheaper to service--but the real impact, we're told, will be on housing.

Why? Two reasons. First, the family house is the bedrock of 2/3 of the nation's families' wealth--and the key metric in their perception of overall family wealth (up, down, neutral). Second, the last seven years of "prosperity" have been ones of equity expansion (rising stock market and home equity) and equity extraction (re-financing/equity lines of credit). If lower rates can re-ignite housing sales, the hope is that home prices will at least stabilize or perhaps even start rising again.

Please read the whole article at the link - It's very interesting.

However, the difference between possible and plausible here is important. I think the most likely scenario is what happens in most recessions and that is inflation subsides and interest rates remain low. Sometimes economics is overthought. Sometimes problems are as simple as they appear at first blush.

It's a better argument than most I've seen, but just because it is contrarian does not make it correct. I believe that the primary driver of interest rates is inflation, not budget balances or foreign purchases. History has taught us this time and again. The exception is if we are near default, which we are not.

:shrug:

That's happened in both of the last recessions. Businesses are too capital intensive and they tend to squeeze as much as they can out of labor before they start hiring again. I hope it doesn't happen again, but it might. However, a Great Depression it is not.

.

I still think we are heading for recession. The Fed's actions are too late. However, we will not see Dow 3,000. We will not see runs on the banks. We will not see 20%+ unemployment.

In fact, they've been lying for years re: unemployment, by using a different set of numbers than have been traditionally used. We're actually closer to a 9% unemployment rate, for starters. Robert Reich stated today that a drop in housing values of 20-50% is a very real possibility.

I firmly believe that Bush and the GOP leadership would poke their own eyes out with flaming sticks before they'd allow anyone to be able to say that the situation is worse than under Carter. With Bush, it's all about keeping up appearances and creating legacies. He/they would lie about anything, and I don't think we'll know the true story about how bad this economy is until it is much too late.

Hey, what do you have against beagles, anyway?

.

"Robert Reich stated today that a drop in housing values of 20-50% is a very real possibility"

Such a drop would not be all that drastic when you consider that that would only bring them in line with historical trends of median home price vs. median income and home prices vs. rents. In every housing bubble (and this is by far the biggest ever), prices have reverted back to the trend line, which has generally been with median home prices being about 3X the median income. At present, a median home in the US costs about 5X the median income. In California, it's 7X median income (and falling quickly in most markets)





Mr. Reich's predictions are probably right on the nose. 20% dives in flyover country, 50% drops in the most bubblicious areas like California, Florida, DC/Maryland/Virginia Metro etc.

To the people who bought homes in bubble areas between 2004~2007 - sucks to be you...

...but that's not going to mean squat to the people that financed their lives on the equity in their homes, or bought at the peak. They were dumbasses, and should have/could have seen this coming like we brilliant DUers did (LOL!), but that doesn't mean it won't hurt and it doesn't mean it won't have an impact on the economy. When a house loses 50% of it's value, you're not making that back up again any time soon. Kiss it off. It's gone.

You're right...it'd suck to be one of them. I'm not, fortunately! My wife and I consciously and deliberately stayed out of this market because I kept saying "This is stupid...I'm not paying half a million dollars for a three bedroom ranch. That's not sustainable!" I've made plenty of stupid decisions in life, thankfully this wasn't one of them.

.

..I edited my post to show that home prices in the US (not California) are at about 5X median income. Sorry for the typo.

I'm so glad to have the money, but something is wrong. Then I wondered how people are mananging who have less.

That's a fact jack.

And I'm middle aged and never seen it this bad before.

Anyone living here has either experienced layoff and/or foreclosure or know someone close to them that has.

I personally know 3 families who lost their jobs and homes and have been either living with friends or moving back in with their parents (in their 40's and moving back in with their parents).

I believe that this is going to be a long and deep downturn.

There was nearly 30% unemployment in Detroit and inflation was over 10%. This is nowhere near that bad. My father lived in Michigan, in the core of Detroit for 25 years. He also has grounding in economics. I will take his word over anybody's.

like bailing out Chrysler.

There is no safety net left. The poor sods in Michigan are going to freeze in the dark this time.

arendt

P.S. What do you mean "grounding in economics" - is that like a three-wire plug? What kind of vague reference is that?

which stated specifically that Michigan hasn't seen this kind of economic turmoil since teh Great Depression.

I have posted it on here many times, but the link to the article is on my old, now defunct computer.

Anyway I can get to my old posts?

Unemployment was far higher in the early 1980s.

It'll happen.

Possibility (Strong this time) + Enough Time = CERTAINTY

And I lived through the big, bad 1978-1979 hit. And there WERE programs to keep you eating and housed if you ran out of cash or unemployment that are not here now.

If another 1978 happens, I'm headed for the HILLS.

When you have 12% inflation, I can make an easy argument for a very very severe recession.

Since 2001, fuel and energy have been taken out of the CPI figures, largely for political reasons.



As you can see, even prior to the current downturn, there was significant price pressure on the average family if you use the old CPI that included food and energy...


Food and energy may not be big considerations for companies and the investor class, but for consumers, they are the two biggest espenses after housing.

Quit talking figures, and visit Detroit, or Toledo.

Reality sometimes doesn't give two shits about inflation figures.

Much of Detroit still looks like shock-and-awe Baghdad. Saying that Michigan is in better shape than in 81-82 is saying very little.

michigan already made the turn.

You just don't know how long "round the corner" is especially with the plug protection team in play.

does not have the power to cause Depressions or Recessions. The stock market reflects the economy, it does not drive it. People will never get that through their thick heads. Stocks correlate with earnings. Earnings correlate with economic activity. A lot of people think the stock market causes economic downturns merely because it is the most visible indicator.

First you pull out your daddy's word and now name calling. You are ruining your own credibility.

If, "Stocks correlate with earnings. Earnings correlate with economic activity." then we need to talk about this after all the dismal earnings form fourth quarter of last year finish coming in.

I, like everyone else around, is scared. We should be. The idiot in charge has lied about everything, and now he keeps saying the economy is good. Well guess what, if he said up the sky was blue, I'd check to make sure before I took him at his word.

We probably never will have anything like the great depression again, but the way the whole world economy is tied today, and the extreme reactions it has had world wide the last couple of days, I think it won't hurt for people to worry a little.

I also worry that they will quit trading oil in dollars, that is one thing that might send us in the depression range. To have all those dollars out of circulation suddenly, the dollar would be worth about as much as a peso. I personally don't know why they don't change it, since the dollar is down to everything else in the world, it is keeping those arab princes from raping the world as much as they want. Oh I know the chimp is buddies with them, but money is thicker than blood with those guys.

Anyway, so calling us stupid (essentially) doesn't help bring us around to your point of view.

Stocks do not correlate with earnings anymore because the books are being cooked all over the place. Much of the regulations are gone, allowing banks to mingle with insurance and stocks in a much cozier way than they were able to 15 years ago. The stocks during the dot com bubble had next to nothing to do with the earnings of any of those companies. Companies replace $15 hr jobs and benefit packages with 50 cent a day jobs, and people in this country continue to wonder why prices are going up up up.

The standard rules of economics just don't apply anymore. It's going to take another major crash to get it back in line.

However, the PTB and the criminals who currently excercise the most control of it have a VAST vested interest in protecting it so their great Ponziconomic Scheme can continue.

And that will have an effect on the rest of us.

because a lot of people are cheering on disaster out of a belief that if "the worst" happens, the Republican party will somehow vanish from the American political landscape. Of course, even if that were to result from Great Depression II (since it didn't happen after Great Depression I) we have to ask ourselves if that's really worth going through what our forebears in the 1930s endured. I say no, not only because it would cost me personally but because the outcome is impossible to determine and such an event could potentially reorient the geopolitical balance in a way that would not be advantageous to the USA. Nevertheless, a lot of people around here are morbidly attracted to doomsday scenarios for those and other reasons.

Last year I took a 20th Century economic history course that I found very illuminating. A lot of it focused on the Great Depression, and even to a member of the relatively uninitiated (18 econ. credit hours) like me, the moves that the powers that be made between the death of Benjamin Strong and the inauguration of Roosevelt were obviously the wrong ones. The abandonment of the gold standard and a focus on internal stability, for one, would help prevent Depression II from rolling around. The Smoot-Hawley tariff was another bad call, along with the things you mentioned. So, I'm not worried about Depression II, although a recession obviously would not be good for anybody. But I hope my opinions on the matter of why it's so popular to predict around here make sense.

You bring the sickness to a head, and then things get better. It's one major schema people use to describe and understand events around them.

"You bring the sickness to a head, and then things get better."

That's so true. As long as the oil keeps flowing.

The indicators are there:
high oil, fuel prices.
Dollar is devalued
Jobs at all time low.
Stock market is volatile.
need more?

accompanied by deflation, not inflation.

Second, inflation is not as bad as it was in the 1970s and none of those recessions compare to the Depression.

Third, I have seen the stock market MUCH more volatile than this. Remember 2002?

Fourth, the stock market does not cause economic downturns. Did you read my post?

Fifth, jobs are closer to an all time high than an all time low. Unemployment is one fifth the rate it was during the Depression.

Sixth, the dollar being devalued has virtually nothing to do with the business cycle.

The inflation that exists is accompanied by stagnant wages, and the inflation in oil is killing just about everybody. People can't afford to fill their tanks anymore, food is going way way up, electric and oil heating bills have skyrocketed. The debt at an all time high, we are just a loan being called due from the country being bankrupt. God forbid that somebody wants to be paid in Euros instead of US dollars.

It all depends on how you look at things - from the top down, or from the bottom up.

You talk about the wealthy and powerful who run the country as "we" - "we will never make that mistake again" and "there are certain things we know now that we never used to."

For those of us who see the rulers as "they" things are bad, have been for a while, and are getting worse. Glad to hear that the stock market and the entrenched and amassed wealth of the few are safe. Maybe some of it will trickle down.

I see nothing indicating a widespread calamity of that nature. Recessions hurt. God yes they hurt. But the Great Depression was a different animal than the 1970 recession.

We should not trivialize the Great Depression, nor did I mean to. I do however think that our views of how the economy is doing at any particular time have a distinct bias, and that the suffering of the ever-increasing number of people on the bottom is too often discounted and ignored. It is now possible to have a wonderful economy by all measures being used, while millions are left in terrible poverty. Do people even count at all anymore when we talk about the economy?

Market Correction. Whatever. The middle class is going bye-bye. I don't know what you call that.

We need a more equitable system of taxation again. That helps a great deal.

is the 'markets' fault. I blame those who manipulate the 'market'.

Your flair for the understatement concerns me.

And it's current coal supply?

You won't believe how many scary headlines I've seen in just my life time. Armageddon hasn't come yet.

These guys won't be buying one.

"Pelosi, D-Calif., agreed to drop increases in food stamp and unemployment benefits during a Wednesday meeting in exchange for gaining the rebates of at least $300 for almost everyone earning a paycheck, including those who make too little to pay income taxes."

... is responding to, not causing, anything.

You can poo-poo the situation we're in all you want, it is serious, it is going to affect most Americans, and it is not going away.

Just because someone cries wolf several times, that does not preclude a wolf actually visiting.

Is it visiting, in the form of a rolling credit crunch, a populace that on the whole is way too far in debt and depending on their houses to bail them out, and houses aren't going to do that any more.

Prices for everything, especially the necessities, are rising and will continue to rise because we get way too much of what we consume from overseas and dollars are worth less and less.

The absurd rate-cutting the Fed is doing, in an utterly PANIC MOVE, is going to make the dollar even worse.

Dismiss all you want, I hope your financial house is in order because the financial houses of many, many Americans are about to be Katrina'd.

I never said it wasn't serious. I am saying we will survive it with the economy intact.

I'm glad you at least agree on the stock market.

.. there's really no way to tell. Everyone ASSUMEs we cannot have another "great depression" because

1) we know more about economics now

2) the Fed has more control now

3) wishful thinking

I'm not buying ANY of it. If knowing more about economics now would prevent disasters, we wouldn't be in this situation to begin with.

The Fed is a paper tiger that can only jaw-bone interest rates and make it easier to borrow money. If nobody is borrowing, the rates can be 1% and it will make no difference.

The fact is, nobody, not me, not you, NOBODY knows how this is going to play out because WE'VE NEVER BEEN HERE BEFORE. And if you think that being concerned, no REALLY WORRIED, is chicken-little, well that is your prerogative. I happen to think this IS the most serious economic situation SINCE the Great Depression, and while I don't necessarily think it will be as bad, I'm not ready to pop the cork on it just yet.

truthful....about anything especially the economy...

The current US administration has allowed and possibly participated in weakening and ignoring standing laws to protect the country against tradgedy in case of stock market crashes etc.

We now have banks-Bank of America that are posting huge losses....because of the bad Mortgages

I am skeptical of the Federal Reserve...

Remember these are the same guys that thought that a Tax Cut for the Rich was a good idea even though a war was going on....

I would rather be mildly surprised that it isn't as bad as I thought than utterly shocked that the economy bottomed out...

We survived the S&L crisis. We can survive this.

Bush crime family's finger prints all over it too.

a lot of smaller ones were gobbled up.

When a bubble bursts you get a self-reinforcing downward spiral and a real chance at deflation. I've said for a long time that I expect stagflation first, but after that one of the real options for the US economy is deflation (the other is hyperinflation). That's a large topic, but at its base it's simple enough. If you have a house you bought for 1 million, and no one will buy it for more than $500,000 and you borrowed $1,1000,000 against it, a combination of you and the bank are eating a loss of $600,000. That's money that effectively just dissapears. Poof, it's gone. And it can't be loaned again, because the house (which you probably don't own, since it's been foreclosed) is now worth only half a million, the money supply can't be increased as much as if it was worth a million.

The same thing can happens with stocks (see Internet bubble). It is currently happening with entire classes of bonds. What matters is when it happens in salaries--when pension funds have no choice but to unilaterally cut payments, when companies unilaterally cut wages or go under, when school boards have to cut jobs and wages.

People have less money--not only because they can borrow less, but because they're earning less. They have to sell even more stuff--houses, cars, stocks, bonds, consumer goods, and the price on those items collapses because they're desperate and everyone else is poor and cheap.

And as the assets that everything is borrowed against collapse in price, the money supply starts to, for a change, actually contract. And just as more money in an economy, given the same amount of economic activity, transalates into inflation, the reverse is true.

Now deflation is only one scenario after stagflation, the other is hyperinflation. Hyperinflation would occur in almost the same scenario except that instead of prices for goods collapsing they explode, because the money supply is so much higher than the amount of economic activity. And it's not yet clear to me which will happen or if we can avoid both because a large amount of what will happen will occur due to deliberate policy choices made by the Fed, Congress, the President and various regulatory agencies and government-sponsored companies.

But there is certainly a great deal to worry about, and it's because housing prices aren't just about housing, they're about money supply, education, competitiveness, retirement and much more. As the largest store of wealth for most Americans, they are one of the lynchpins of the US economy, and if they get knocked out the very foundations of the US economy will be disturbed.

As many have noted, the last time the US saw widespread housing price declines was the Great Depression.

That's not an accident.

Granted it is the principle cause of our dilema, but I was addressing more the frantic mentallity of stock market swings.

The real estate bubble will make this recession a nasty one, worse than 2001 certainly. It will constrain credit and drain purchasing power. However, there are actions that can and eventually will be taken to prevent this from spiraling out of control. If the free market were the only force, I would be worried, but we have a number of policy tools available.

As for correlations, don't confuse them with causation. The last time the stock market declined as much as it did in 2000-2002 was the Great Depression. The last time corporate profits fell as much as they did in 2001 was 1932. The last time capital spending fell by as much as it did in 2001 was the Great Depression.

The Bank for International Settlements, the world's most prestigious financial body, has warned that years of loose monetary policy has fuelled a dangerous credit bubble, leaving the global economy more vulnerable to another 1930s-style slump than generally understood.

"We haven't faced a downturn like this since the Depression," said Bill Gross, chief investment officer of PIMCO, the world's biggest bond fund. He's not suggesting anything like those terrible times — but, as an expert on the global credit crisis, he speaks with authority.

"Its effect on consumption, its effect on future lending attitudes, could bring us close to the zero line in terms of economic growth," he said. "It does keep me up at night."
--------------------------------------------------------------------
Will it be bad? Yes. As bad as the Great Depression? I don't know, but it doesn't look good according to the 'real' experts I've read, but if you want to be optimistic, that's fine with me, I rather hedge my bets, when we are witnessing a 30% drop in real estate value in less than 6 months across the board.

The real estate market fueled a false economy.

Then he revised his statements. If you listened to Bill Gross, which I made the mistake in doing, you missed a huge rally in bonds. I only caught the first part of the bond rally thanks to a lot of these "experts" who simultaneously didn't see it coming and now forecast total doom.

which effects all local government even to the state level
even the US is almost gonna lose it for the first time since 1917 according to Moody and others.


Where is that in your analysis?



This is serious epidemic dysentery, not a fart, or the normal 24 hour flu run to the toilet for just a family member of the stock market, it goes to the foundations of our economic system even back to the beginning of the Federal Reserve. You are aware of this right?

There are ten pages or more on this.
http://search.us.reuters.com/rsearch/rcomSearch.do?blob=Fed+added++in+temporary+reserves+to+the+banking+system+&site=US&srch_Tab=&srch_Results=&srch_MoreResults=

Just be cautious and dig deeper.

Really, so what if a AAA Rated bond is reduced to a AA rating? Do you think that merely because the rating has changed one or even perhaps two spots, the issuer will now no longer make timely interest payments or even default?

This whole story about MBIA and AMBAC being downgraded is misunderstood by many, apparently. Sure it is a serious issue but it isnt earth shattering and it will not bring a huge wave of defaults. What it will do is make a shitload of decent bonds available because all the funds that have to hold A's or better will now be selling off bonds that were A rated yesterday and are now BBB. Big fucking deal. All that will do is make them cheaper for you and everyone else to buy. Cheaper bonds means higher yields. See? There is a bright side.

Want to know how it affects local government? It makes it more difficult for municipalities that are on shaky financial ground TO BEGIN WITH to have underwriters bid their bond offerings "competitively". Again, so what? If they have to pay another 25 or 50 or 100 BPS in interest, so be it. It's a good thing for you if you are a muni bond buyer. If they can't get their bonds underwritten at a rate they can afford, the municipality will then have to get its fiscal house in order. Again, thats a good thing, not a bad one.

And US Treasuries are STILL and will CONTINUE to be viewed as having virtually zero risk because of the way this country operates. The financial markets are extremely deep, transparent, VERY WELL REGULATED, liquid and politically stable. The fact that Americans very reliably get up out of bed every morning, go to work and WILLINGLY pay their taxes without having a violent coup every few years or burning down the Capitol Building actually means something to the rest of the investing world, whether you choose to believe it or not.

You would make Neil Cavuto proud.


"The financial markets are extremely deep, transparent, VERY WELL REGULATED, liquid and politically stable."

Do we even begin with this statement?

Just because you don't like what I have to say, I should go on Faux, eh?

Come on. I know you can do better than that. Why didn't you just call me Larry Kudlow and be done with it?

to humiliate yourself in public

Just add up these figures and tell me how transparent
they are and what they really mean.



http://search.us.reuters.com/rsearch/rcomSearch.do?blob=Fed+added++in+temporary+reserves+to+the+banking+system+&site=US&srch_Tab=&srch_Results=&srch_MoreResults=

Why is that?

Fine. You didn't like the statement about the markets. Got ya. And you provide a link to a list of stories about the Fed doing it's job. So the fuck what? You add up the figures. If they are available, it's pretty transparent, isn't it?

I don't for one second expect a cogent argument from you as to why a downgrade of a rating or two is calamitous, so I won't be holding my breath waiting for your enlightened reply.

As far as humiliating myself "in public"...well...I've been posting on this board for quite a few years and have gotten pretty good at that, so thanks for the compliment. But to be truly humiliated, I have to give a fuck what others think. In this case, you aren't that special.

Since you've only been around for about 45 days or so, I must say that you have gotten the hang of it pretty quick. Well done!

That kind of delusion is invincible.

That kind of banal contribution to a conversation is hardly enlightening.

This whole story about MBIA and AMBAC being downgraded is misunderstood by many, apparently. Sure it is a serious issue but it isnt earth shattering and it will not bring a huge wave of defaults. What it will do is make a shitload of decent bonds available because all the funds that have to hold A's or better will now be selling off bonds that were A rated yesterday and are now BBB. Big fucking deal. All that will do is make them cheaper for you and everyone else to buy. Cheaper bonds means higher yields. See? There is a bright side.

There are many, many pension funds and large institutional investors who are required to buy and hold only AAA rated credit. The (potential) downgrade of MBIA and AMBAC will cause the debt they insure to lower in rating, forcing a sell-off by pension funds. To act as this would have no consequence is not seeing the whole picture.

You pulled the quote. I said it will make them cheaper. I say that because the market will now have many bond holders (Like the funds you mention) looking for buyers and that will force prices down and yields up. There are plenty of High Yield bond fund managers out there that I would think would be happy to snap up a AA corporate debenture that was rated AAA only yesterday and is now yielding 200 basis points (or whatever) more than it was.

Again, is this a serious issue? Yes it is, but I just don't think it will result in a wave of defaults which many on this board seem to think is going to happen. It will most assuredly affect the NAV of quite a few high grade bond funds but I just don't see it as a catastrophe. I could be horribly wrong, however and freely admit that.

I'll also admit I was a bit simplistic and I'll blame that on the lateness of the post.

Hell, they make it up in the interest payments they get anyway. So a few bond funds get hit with a flat performance or maybe a slightly down year. OOOOHHHH NOOOOOOO!!!!

Calm down.

The Great Depression is stamped indelibly in the minds of millions of Americans. We know it, and we fear it; the memory still carries the force of that trauma. And it will take another 30 years for the last of the youngest of that generation, and their memories, to die.

There is another part to the fear -- the American and the world economies need fundamental changes, including a nearly complete re-building of the energy and resource infrastructure. Such a project will take at least 20 years and be as costly as a world war. If we approach it in an orderly, planned fashion, it will be a time of great progress and optimism; but our preferred approach is to stagger blindly from crisis to crisis, which guarantees trouble. We are already in the early stages of an era of trouble, and many are afraid that we will end up flat on our faces with a billion or more deaths from war, famine, or pandemic disease.

It's fashionable to talk about "disaster porn", but these fears are coldly rational. We have, in fact, avoided confronting most of our basic problems, and the feces have begun to hit the fan. Still, there is little recognition of what we need to do, and what little there is serves as "greenwash" -- like ads with pictures of high-tech windmills superimposed with children at play, praise for non-existent cars like the Volt, and enough empty talk to float a fleet of Titanics.

The future will not be sexy. It will take the strict supervision of our money, the pouring of concrete and the smelting of metal, and the physical and mental work of two or more generations. I believe such a project is doable. But do it we must, or we will pay an inevitably painful price for our mass irresponsibility.

--p!

Both attempt to claim the rational ground. Both have their moments of clarity. But after the past seven yrs, the business-as-usual optimists are losing ground denying conspiracy and other assorted doom ....but ya know, invariably, we're all doomed. Helps to keep that in mind.

Try missing a few - not because you want to, but because its either YOU eat, or YOUR KIDS eat.

Then tell us how "apocalyptic" things feel...

issue. Most Americans suffered with that problem then. Now it is too common, but nowhere near as common as it was then.

Nah...not the post to fly this flag in

since the last "recession" after 9/11 (source: Keith O), and for those Americans, you can safely bet it feels apocalyptic, as it does for those living anywhere near the poverty level.

The middle class and the poor.

"Now it is true that unregulated banks did own stocks in their asset portfolios. We don't allow that anymore." Instead, the banks hold much more prudent and conservative assets; you know, hedge funds, CDO's and the like. Fasten your seat belts, it's going to be a bumpy ride.

analysis.

The whole central bank model is flawed in concept because it was designed to transfer ever increasing amounts of power/money to those that own them. Since the vig is never created it inevitably drains and destabilizes the system, a non-productive/destructive liability.

On November 12, 1999, President Bill Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act of 1933.

Provisions of the Glass-Steagall Act were directed at these abuses:
http://www.cftech.com/BrainBank/SPECIALREPORTS/GlassSteagall.html#anchor854514

(1) Banks were investing their own assets in securities with consequent risk to commercial and savings deposits. The concern of Congress to block this evil is clearly stated in the report of the Senate Banking and Currency Committee on an immediate forerunner of the Glass-Steagall Act.
(2) Unsound loans were made in order to shore up the price of securities or the financial position of companies in which a bank had invested its own assets.
(3) A commercial bank's financial interest in the ownership, price, or distribution of securities inevitably tempted bank officials to press their banking customers into investing in securities which the bank itself was under pressure to sell because of its own pecuniary stake in the transaction.


The Gramm-Leach-Bliley Act, also known as the Gramm-Leach-Bliley Financial Services Modernization Act, Pub. L. No. 106-102, 113 Stat. 1338 (November 12, 1999), is an Act of the United States Congress which repealed the Glass-Steagall Act, opening up competition among banks, securities companies and insurance companies. The Glass-Steagall Act prohibited a bank from offering investment, commercial banking, and insurance services

History of the engineering steps
http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html
Just days after the administration (including the Treasury Department) agrees to support the repeal, Treasury Secretary Robert Rubin, the former co-chairman of a major Wall Street investment bank, Goldman Sachs, raises eyebrows by accepting a top job at Citigroup as Weill's chief lieutenant. The previous year, Weill had called Secretary Rubin to give him advance notice of the upcoming merger announcement. When Weill told Rubin he had some important news, the secretary reportedly quipped, "You're buying the government?"

Ex Goldman Sachs employees chair the leadership of nearly every Government level financial institution in the world.

Reckless lending practices were then implemented to blow two housing bubbles across three administrations of "Republicrats" for the purposes of siphoning 4 Trillion from the US economy to advantage the labor arbitrage in Asia. If the public were asked to build a manufacturing infrastructure overseas via taxation the public surely would rebel, but threaten them with being locked out of the American dream of homeownership in an environment of perpetually appreciating prices and you can generate enough gamblers to get the job done.

I would have to imagine that some extremely influential member banks have serious exposure to this off balance sheet dilemma. Until this is resolved and confiscations of real assets will more than "over" compensate, their tools which are the FED and Treasury will do everything possible to keep the liquidity flood gates open, even a special conduit or two. Of course being that the balance of payments between the two economies FIRE (Financials, Insurance, Real Estate) vs Production / Consumption (Real) is 10 to 1, its going to take some serious shuffling to get the worthless 90% into the right hands -ie the unconnected players. If one believes this debacle was engineered, then an exit strategy must have been planned. To discover this would seem tradable. If one believes this was just poor oversight and happenstance,
We certainly do then live in an idiocracy and are doomed. (Remember the safeguards put in place 3 generations ago were dismantled under the pretext of Modernization, accident??)
Now a 100 Billion dollar super fund M-LEC is being constructed to hide the losses of these SuperBanks till such time as they can be absorbed, by inflation, pension funds, and unwitting investors. Ultimate outcome, extreme reduction in the American Standard of Living - Economic Warfare. This repeal allowed banks to lend obscene amounts of money to debtors who can never repay, by allowing the investment houses of these large banks to securitize the loans and sell them in the open markets, thus removing incentive to scrutinize the applicants while freeing their reserves to lend more capital, to additional players whom also could never repay –a classic credit expansion dwarfing the corruption that occurred in the lead up to the Great Depression. In effect a license issued by the government to bypass FED controls on the money (credit) supply endorsed by the FED’s own “member banks”. An engine of obscurity, if you will. Essentially with regard to inflation dynamics credit spends as well as cash and elevates prices of the targeted asset class, driving the mania hence the "Housing Bubble"

When the bulk of the paper debt instruments are distributed to the appropriate parties the liquidity flood gates will be closed and the confiscation will commence.

_______________________________________________________


Every one of these abuses was known and repeated, lending enormous credibility to the warning of Catherine Austin Fitts and her fitting description of a Tape-Worm Economy. Having worked at the administrative levels of HUD it is her contention that these bubbles were economically engineered to skim large sums of capital from the US to build manufacturing abroad to advantage the labor arbitrage.

http://media.aprn.org/2007/toa-20071016.mp3 Very enlightening interview, well worth the time.

Cynical obviously, outrageous maybe, impossible highly unlikely.

http://64.233.167.104/search?q=cache:Q7Udh38pRDsJ:www.bbc.co.uk/blogs/thereporters/justinwebb/2007/11/the_ron_paul_argument.html+Senators+voting+Yes+on+Gramm-Leach-Bliley+Act&hl=en&ct=clnk&cd=28&gl=us&client=firefox-a

:kick:

A well written, reasoned, logically presented, objective post.

The number of DU'rs that are convinced a depression is coming is astounding. It is as if they just don't realize just how incredibly diverse and, as you aptly point out, resilient the US economy really is.

Want your own, real, personal financial disaster? Follow the suggestions of some on this board that promote the idea of selling out of stock positions (at a low point) and buying Gold (at a high).

Now to bust the meme of "we don't make anything here anymore". Anyone that believes that has never taken a look at The Thomas Register.


Finally. Thanks Zynx. Thanks a ton.

Those who shun buying stocks now will look as dumb as those who sold in 2002. If they want a Depression reference, they will look as dumb as those who sold in 1932. I did that one just for shits and grins.

Soon to be.

We have baby boomers about to retire....

And the boomers are pushing record monies into the SS coffers....

But instead of buying down the deficit in anticipation of the record deficits the redemption of the SS IOUs will cause....

Bush's war is racking up record deficits while the anticipated SS surpluses were used as justification for massive tax cuts for the rich....

Meanwhile, to further justify the tax cuts, Greenspan cut Fed rates to ridiculously low levels.....

Which caused an artificial housing bubble, not to mention a consumer credit bubble...

All the while industry after industry was off shored to China.

Yep. The Economy has never been in better shape!

instead of investing in safe pre-retirement saving vehicles, are putting their money in the stock market because they can't get decent returns anywhere else?

And that this is inflating the market over traditional PE ratios by about 50%.

The economy in the 1970s appeared to have fundamentally failed. No problems we are facing are unsolvable. Are they problems? Certainly. Can they be solved? Just as certainly.

short-term fixes that will make the inevitable "crash" that much worse.

There hasn't been a Depression since 1929 and one need not happen. The entire field of economics has been devoted to this issue since the 1930s and so far we have done pretty well. Two generations have passed and a third is coming in. If a Depression is not inevitable in a generation I fail to see how it is inevitable at all.

It would take a Herculean effort to fix the mess we're in. But instead, Denial stretches as far as the eye can see...

I believe we will survive this better than the doom-mongers project.

in which the service economy is sustainable. Once larger countries start outpacing us in manufacturing and technology, what we'll be able to pay each other for services won't be worth much on the global scale.

So, while I'm not one of those who watches the stock market for signs of insta-collapse, I do expect the economy to deteriorate steadily over the course of my lifetime unless the country makes a drastic change of course.

The day it opened, I told my wife "How the hell can you replace industry with a mega-mall?".

Strangely enough, it went bankrupt 6 months after it opened.

Michael Moore's first movie which he premiered at Sundance.

It was about the closing of the Flint, Michigan Buick plant and 30,000 people were laid off. He showed the effects of the economic disaster on the city and the people.

Then the city fathers got the bright idea to build some big hotel-convention complex. Of course, it failed, because there was no economic base, no good jobs, to support that hotel project.



Seems like America can't take care of its hungry, its homeless, its wounded veterans, its poor children, its abused, but can always build another sports stadium or another mega church.

in sight. people have no future and no safety net, and THINGS ARE GETTING WORSE, not better, every year. do the math on that.

there are people who post here who don't know history or economics.

I am simply astonished.

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If it's not a depression, it's the impending invasion of Iran, or martial law, or cancelled elections, or false flag attack, and on and on.

so have DRAMA QUEENS...





Having said that, it can also serve as entertainment...



Unless, of course you want to become a CONCERN

but I hope and pray we don't have another one...

The REPUKES have eliminated almost all of the protections that FDR and the New Deal created...

I think that if we had Bush non-stop for 30 years he could do incredible damage, but the fundamental soundness of our economy remains intact. We can survive this.

becomes 'common knowledge' when trumpeted enough to gain a foothold. It's a useful way to make a point, play devil's advocate or highlight a broader picture. That's cool. I do it in meetings - follow a position to a logical extreme to make a point. I don't always believe my own hyperbole, and say so, but it can help frame a discussion.

But to the why? I haven't a clue. There's something to be garnered in the fact that disaster - personal and public - mayhem, crime and sundry 'end is near' reports are news. And water cooler, coffee shop, local bar, internet talk.

This I've found to work for me, on a small personal scale. Once, self employed, I ran across a successful small businessman who told me repeatedly - "Don't assume the worst and blame people, expect the best. Don't make people wrong, let them make themselves right. If they don't, move on. It's cleaner that way."

which was previously the worst economy of my lifetime.

More industries and even white collar and technical jobs have been outsourced

More people are in serious debt

More people are living in houses that they can't really afford

The invasion and occupation of Iraq is costing 250 million dollars a day, and it's being financed by borrowing from other countries, only the other countries are getting annoyed with us and are starting to turn to the euro

As was mentioned on a couple of threads yesterday, unemployment is seriously understated

The gap between rich and poor has grown markedly since 25 years ago, and the working class has actually lost ground since 1979.

Remember that in '81-82, we still had a basically sound economy. Most industries were still here. Houses didn't cost that much. Consumer debt was low in relation to income.

had ever been at that point. Inflation was 12%. Unemployment was 11%. Manufacturing jobs were not actually that much more plentiful than they are now. We still have about 75% of the number of manufacturing jobs we had back then. I don't have the numbers on me, but I recall that being the case.

Deficits as a percent of GDP were higher.

Interest rates were 21%.

No, I think we are in much better shape. My parents lived through that in the Midwest. They never have seen anything like it before or since.

and I'm starting to see consumer price inflation picking up speed.

Food, shelter, utilities? We used to have a manufacturing base, which is in the process of being destroyed.

that the poor, useless, ignorati are concerned with. :mad: Reading this post has made me sick.

The only statistic that is worse is the trade deficit. That's a long term concern, but the correction for that is not as bad as people claim either.

We still had a manufacturing base during the Depression.

Who would have thought regulators would allow lenders to write mortgages for people who didn't have sufficient income, with little or no proof of income or assets, no disclosure and no mortgage insurance on homes they can't afford?

We won't find out how many rules and regulations have been broken or eliminated until after the economy tanks and someone starts investigating.

is the loss of America's manufacturing base and its replacement with low-level service jobs all throughout the labor force.

in charge of. They wanted the economy to be unsound enough that they could claim we couldn't afford social programs but they have screwed it up beyond what was planned. Somebody has to pay for the irrational spending. Looks like Bin Laden may have been right again.

When a retailer's customers pull back, they might be hurting at the margins, but the retailer goes out of business before all the customers go broke. The same principle applies to exporting countries like China.

All the Chinese have to do is start lending money to the Chinese and quit lending it to the United States.

It saves on shipping too.

:grr:

GET A CLUE!!!

It's not even worse than 2001 yet. Certainly not 1990. Not even close to 1981-82. Why don't you gain some perspective rather than scream at me and call me names. That's just so productive. Maybe you'll stimulate the economy with all that screaming.

we're coming out of it.

If as you suggest this recession will last 4 years, and I agree it will be 4 years if not more....than you can bet we can call it a depression at that time, not just a recession.

Even though the OP acknowledges how deep and painful this recession will be, posters are responding with venom because the OP says we're not 'DOOMED'. Very, very interesting peek into human nature.

:-)

I personally expect an absolutely disastrous few years ahead. Possibly as bad as the Great Depression, maybe more like the 81 recession - either way, it will be very rough, with serious unrest in underclass communities and massive displacement. Many people have never experienced living in such an economy and will find it to be a very tough pil to swallow.

But that doesn't mean we are "doomed". In fact, an economic meltdown is probably just the thing we need to drum into people's heads that endless tax cuts and borrwoing and low interest rates alone are not enough to create lasting economic prosperity. A broad middle-class and a working class with real hope is crucial for the economy to really work in the long term, and the model for the last two decades has destroyed that. It's time to realign our economy so that it works for more of the people, more of the time.

The Great Depression was the impetus for some of the most progressive reforms our country has ever seen, and the New Deal set the stage for the BROAD-BASED prosperity the country experienced from 1949 to 1972. A second New Deal is long overdue.

Just asking.

NOTHING lasts forever.

Not the Roman Empire, Not the Golden age of Greece, the Babylonians, the Persian Empire, Carthage, The Italian City States, the Hanseatic League, Imperial Russian, the USSR, Imperial Germany, WIEMAR Germany, NAZI Germany, East and West Germany, The Age of the American Robber Barons, Imperial China, Communist China...

Shall I keep going?

WHY do you think that the "ECONOMY" gets a "by" on this? Do you actually believe the United States will last forever? Jefferson and Adams wrote of the end of the Republic. We have lasted longer than the Roman Republic and the Golden Age of Greece already. The writing that usually signals the end of a "system" are already on the wall, in 10' high neon:

The persistence and dominance of a landed or wealth centered elite...
The drastic widening of the Rich/Poor Gap with no relief or change in sight...
A "hereditary" Ruling Class (not necessarily a Monarchy)...
Rapidly increasing unfavorable Trade Ratio (see "Venice")...
Religious intolerance/dominance/scisms and the attendant "pogroms"...

There are only about 20 or 30 more historic markers for Empire collapse or civil war.

Doesn't ANYONE take HISTORY in college anymore?

creates enmity between rich and poor - historically a path to revolution.

That is a horribly simplistic view of history. France has been a country for a thousand years. Portugal has been a country for 900 years. China has been a country in one form or another for 2000 or more years. Russia has been around for 500 years. Spain has existed in some form for 800 years. With bumps in the road, all of these economies have inevitably trended upward in their economic growth.

That is one of the singlemost stupidest posts I have read at DU.

France has been a country for 1000 years? Where the hell to start responding to simpleton babble like that.

That "country" has been conquered, destroyed, rebuilt, and existed in many different forms in that 1000 years.

It is likely the USA will go through similar changes in the next 750 years.

He declared it to be inevitable. Many nation states have far longer histories and have survived far worse.

I think perhaps he was trying to say that The United States IN IT'S CURRENT FORM will end, and that may very well come to pass.

The country may continue, but the current form it is in may not.

Our empire, in terms of foreign wars and military bases, might end. Our place as a global economic leader probably will not.

I think the most honest answer any of us could give at this point is that we don't know.

I don't think one should live in a state of Doom and Gloom or a state of Rose-Colored Delusion.

I think due to the territory we find ourselves, all things and all possibilities have to be considered.

In the end, the most important thing we all need to understand is that if indeed the shit is going to hit the fan, and the financial system stands a very real possibility of a systemic breakdown or collapse, there is very little that you or I can do about it.

What matters is how we can survive it if it does.

And unfortunately for most of us, that variable will remain an unknown until the bridge is crossed.

We all simply have to do the best we can with what we have.

Living in fear of an Armageddon that may or may not happen is not healthy.

But to completely dismiss it as a possibility really isn't a good thing either, especially with all the rot that is coming home to roost.

And they all have very strong social programs which have closed the gap between the rich and the poor.

and burning furniture to keep warm,. Ireland and potatoes, Russia and no food and fuel, the French REvolution which took the heads literally of people who thought they're just bumps in the road.

Hey , let them eat cake.

I was not referring to short term economic and political swings.

...but the fundamentals are there for a depression that will be worse than almost any of us have experienced in our lifetimes. People constantly have been seeing it around the corner because it has been years in the making. The personal debt bubble has been growing since the beginning of the decade, and the destruction of domestic industries and middle class jobs has continued unabated.

The fact that the home equity ATMS, credit cards and other life preservers (which have allowed families to keep up the pretense of a middle-class lifestyle) would eventually run out was an inevitability. Bush and the fed put all of the country's eggs in one basket - gambling that a huge influx of creatively packaged consumer debt and mortgage products would lead to endless growth and rising home values, and they lost. Assuming they didn't know what was going to happen. I personally think they knew how destructive the end of this bubble would be, but they wanted a few years to extract every last drop of lifeblood from our economy to line their nests with, so that "when the barricades go up" (as Mike Malloy likes to say), they can whisk themselves off to retirement mansions in exotic locales while poor, working and former-middle class Americans fight in the streets over the wreckage of our country.

Nobody says the economy will contract to zero. It didn't contract to zero in the Great Depression. But the social fabric of the nation was much stronger then. That was in the days when if one famer's barn burned down, all the other farmers would get together and have a barn-raising to help him out. The social fabric today is much more frayed, and people are much more fraught with cynicism, rage and fear, so when the economy goes south this time, and people who have never experienced a severe recession are standing in bread lines, and cash-strapped states are forced to let thousands of prisoners out early (already happening in California) we are likely to see unrest nationwide that will make the 1992 LA riots look like a Hannah Montana concert.

The repubs have been working hard to undo everything that FDR did. Get rid of SS, privatize it. Go find a job in one of the foreign countries we outsourced your job to. Your employer raids your pension fund? Oh well. Go shopping, just charge it. People have forgotten the depression, and they have nothing to fall back on. The rich don't think they should give back to the system, because god only knows they need even more money.

It is also interesting to note how flat the market was from @ 1966 to @ 1983.

Gee, that's when average Americans made the greatest real wage gains. Fancy that!

First of all, Americans suffered terrible wage losses in the early 1970s due to inflation. Real wages were flat to down. Also, you picked the absolute trough of the market in the 1970s. It never got close to that low again.

They didn't start to go down until after that, no?

It recovered virtually all of its October losses, not September losses, between November of 1929 and April 1930.

Hardly a bump in the road.

From 1983 to now.

Ever see the movie, "All The President's Men"? Watch the scenes in the newsroom and marvel at how low tech everything was in 1972. Then fast forward to the 2002 Washington Post newsroom. You will see computers on every desk, network communication, software, graphics programs, cell phone, PDAs, etc., etc. etc.

It gets the lion's share of credit for it. However, that is to be expected in the history of economic progress. Productivity gains are how true economic growth occurs. I have seen a remarkable amount of innovation in the past 7 years and continue to see it.

I am part of the working poor.
I doubt the economy can get much worse for me.
I doubt bankers and investors will be selling apples and living in their cars.

I doubt the working class will ever get a fair deal.
I doubt the sheeple will ever demand a fair deal.

If you factor in inflation and the devaluing of the dollar the stock market is in the crapper and has been since 2001.

We are in stagflation right here and now.

This nation is so dependant on easy credit.. we are like a junkie looking for our next high. Seriously rates are really fucking low right now and all Wall Street does is beg and plead for more cuts.

So what does the Fed do? They lower again and again and inject more and more cash. Its a freakin joke. Wages as a national average are stagnate, the dollar is down and in the meantime inflation is everywhere, healthcare, energy, food etc etc. My health premiums are up 409% since 2000.

Hell, the PE ratio was 35-40 back then. It takes time for excesses to correct.

If the energy isn't cheap, then physical reality rounds that corner, and catches up to us. Then we're not so fine.

Bit by bit with some bigger chunks during these recessions. Much like our civil liberties are chipped away with each decision by a Federalist society appointee to the Federal bench and then larger chunks when people are scared shitless.

Some people expect the apocalyptic melt-down to come from God, others expect the expect the apocalyptic melt-down to come from the markets. Either way, I'm sure both have a Rapture Ready meter just about to pop...

We just like to over dramatize things over which we have no control. Yelling out the sky is falling gets people to listen to us-- regardless of whether we use the markets or God to do it.

The collapse of civilization is simply sexy-- it allows us to more easily fantasize about using our guns to shoot looters, and validates that basement full of MRE's, duct tape and flashlights we've been investing in for years (Civilization is going to collapse tomorrow. Thank God! I finally get to justify buying $3,500 of bad food from the military surplus store-- and shoot some looters in the process...).

Nicely put.

stock market tanking, govt printing paper money by the truckload, paper dollar worth 53 cents , in debt to China, Japan, India, Saudi Arabia, Abu Dhabi and who else knows who, interest rates on credit cards at 30%, mortgages and cards being defaulted....

but hey

let's break out the champagne.

The stock market hasn't even entered bear market territory yet. This is not some historic meltdown.

No major bank has failed. Hell, only a few tiny banks have failed and that happens every year.

There are plenty of jobs. Manufacturing output is as high as it has ever been. Look at industrial production figures for once.

Also, there are not 108 million foreclosures. Where the hell did you get that?

:rofl: You shot your credibility for sure with that one!

No major regional bank has failed yet.

resetting over the next 2 years

Implode-O-Meter

"Since 2006 218 major U.S. lending operations have "imploded "

http://209.85.165.104/search?q=cache:4gzsdzoQI4YJ:ml-implode.com/+www.ml-implode.com&hl=en&ct=clnk&cd=1&gl=us



FDIC banks

http://209.85.165.104/search?q=cache:Uu5akntYt94J:www.fdic.gov/bank/individual/failed/banklist.html+bank+failure+list&hl=en&ct=clnk&cd=1&gl=us

Just 2 examples. The first my own mortgage broker put me onto.

By the way, neither list includes the European banks that have gone under due to
the US's sale of subprime mortgages to them.

and frankly listen to the interviews of the economists at Davos.

Nice to be such an optimist, but there's a time to admit the emperor wears no
clothes.

www.reuters.com/article/bondsNews/idUSCHB00041520080122 - 81k -

I called for a recession. There is no doubt about it. However, we've had the better part of a dozen recessions since the Depression and none of them have been anything close to it.

:shrug:

from what I;ve read you
may be even on Wall Street yourself...so you may not be affected YET by the recession. I've noticed that Wall Street has difficulty recognizing a recession..otherwise they wouldnt be running around asking each other "is this a
recession, is this a recession"


The average American people are being affected. They've known for quite some time
this country is going down into a recession, and aren't as easily fooled by the rah rah administration , the economy is in good shape.

You cant give humongous tax cuts to billionaires and oil companies who dont trickle down, raise gasoline prices to the limit that is almost unafordable, and spend $500,000 a minute on a useless war and ignore the drain on the economy, the drain of jobs and the lower wages in this country.

Sorry you dont agree, but most know this is a recession and it's not going to be over soon - the stage is set for a depression in this country - and maybe world wide unless policies in this country change - immediately.

Since boooooosh is never wrong nothing is going to change. By the time a democratic president gets into office quite a lot more damage will be done to this economy. It's questionable whether it can be turned around

You subscribe to the belief that Wall Street is the economy- your beliefs are based on what Wall Street is doing.

The average American doesn't base whether the economy is good or bad by Wall Street. They know what the economy is by the price of milk, meat, gas, and how far their earnings go towards groceries and rent or mortgage.

1% rich and poor since 1929....none of them have had a war costing $500,000
a minute at the same time as the industrial infrastructure of the country has
been decimated, none of them have had the loss of jobs to outsourcing which didnt even exist in 1929.

Your theories are out of touch with the real world.

The stage is set.

Dont jump out of any windows.

Not one major regional bank has failed. Not one national bank has failed. Not one institution with more than a couple billion in deposits has failed and those that have have been absorbed by other banks. This isn't the 1930s. We aren't going to see 5,000 banks fail. Most of these mortgage brokers are small potatoes.

taken over by other banks or not - they still failed.
That "Implode" list is being watched every day by money people.

You dont call Sun Trust a big regional bank ? - belly up.

http://money.cnn.com/2008/01/07/news/economy/paulson_speech_firsttake.ap/index.htm?eref=rss_topstories

Eensy-weensy difference, wouldn't you say. And mortgages "resetting" because they are adjustable is not equal to mortgages foreclosing, which is what was claimed upthread.

Careful with the Q-tip.

"Paulson, in remarks prepared for a New York speech, said that the country was facing an unprecedented wave of 1.8 million subprime mortgages which are scheduled to reset to sharply higher rates over the next two years."

yes, i'll have to get a hearing aid, 1.8million not 108 million but in the link you posted he still doesnt sound very optimistic

Then again, when did we ever know this administration to ever tell the truth about figures. The 9 trillion we owe it now turns out does not include the amounts for the war.

Also they have no way of knowing exactly how many subprime mortgages are out there and have been sold all over the world.

Nevertheless even if he admits to 1.8 and its actually 5 million, that is nowhere close to 108 million. My apology for the mistake. Good you found that

That's resets. Not foreclosures.

"resets" Obviously even the moron in the WH knows those resets are going to
end in foreclosures unless the govmint does something.

WE'll see what they're going to do. If Katrina is any yardstick, not much.

Actions are being taken to mitigate the damage as we speak.

something for you to remember for the future.

It also does not come across as very adult. And I'm sure you want to present yourself as an in control adult. :)

I do not have to treat them with respect. When someone is screaming false information at the top of their lungs to spread panic I reserve the right to humiliate them.

If someone is doing as you stated, what you should do is counter with the facts and figures that you have and attempt to engage in reasonable debate.

If they won't listen, why not agree to disagree and move on?

Being an asshole to someone because you think it's your right, because you believe you are in the right, just isn't right.

Leave that kind of stuff to the people on the Right.

You're better than that.

than IBD or the WSJournal ?

Oh I'm sorry I'm too busy being a capitalist pig. I guess I will go pee on the working man for shits and giggles.

Will I deny I subscribe to the Wall Street Journal? No. But I also read the New York Times, Washington Post, and a bunch of local papers mainly to keep up on politics, but I also read the business sections and see the layoffs and everything else you have enumerated. Believe it or not, the mass layoffs make headlines in the WSJ. I probably see more about them than you do.

I don't read IBD since I think it is a corporate rag. WSJ atleast has good political reporting. The editorial page is sewage, but their investigative reporting is good.

has Murdoch just bought it? Well the political news and the whole newspaper will
soon change. Doesn't Fund/Funt that far right wing disgusting sample of non-humanity still write the editorials? Bet Rupert makes him managing editor.

Now there's a guy you can't ask " Do you still beat your wife" cause he does lolololo.

We'll see who was right.

I rather doubt we will even have 7% unemployment in six months. I also am willing to bet the economy will be recovering definitively by June of next year.

I will wager significant money I'm right. In fact, I know exactly where I can do that.

look it up

Look up how recessions unfold and get back to me.

Mine don't.

Every other locality I have lived in or near I check up on. There is some pain, but hardly the next Depression. Just as killing 1,000 people does not make a leader a Hitler, a 1% foreclosure rate does not make a recession a depression.

In geopolitical terms, Bush is no Hitler because he hasn't tried to exterminate a whole race or annex a whole continent, but in moral terms, he is every bit as much of a mass murderer as Hitler, because he KNEW there were no WMD, KNEW Saddam posed no threat of any kind to the US, and he KNEW that Shock and Awe would result in tens of thousands of deaths due to "collateral damage". The fact that he knew all that and invaded Iraq anyway makes him a mass murderer. Just like Hitler, but on a smaller scale, IMO.

Next?

What's $400,000,000,000.00 in interest a year between friends?

However, the level of debt, if kept relatively constant, is sustainable. We never paid off our WWII debts and they were more massive as a percent of GDP. We did keep debt steady for nearly two decades and it resulted in a lower percentage of debt to GDP.

40% of those interest payments go the the Fed.
23% goes to foreign investors.

Jane and Joe Citizen are being fleeced. The wealth flows ever upward and away.

Now, I agree that the Debt isn't the only reason to be pessimistic about the "Market" but it's symptomatic of the Ponzi Scheme being run on the American people. When you talk about the Debt/GDP ratio what you're really talking about is the Citizen's/Fleece ratio.

Staying on this theme, recall the S&L bailout which cost (fleeced) $125B. Some suggest that that bailout led to the current sub-prime fiasco by allowing lenders to take on a higher risk knowing that they were likely to be bailed out by the govt. in the event of a collapse. As a matter of fact, there is a bond insurer bailout in the works right now. The "Market" and the Debt work against the interests of Joe and Jane and for the PTB. Ergo, pessimism.

and no regulation on their externalized costs, the economy will just keep purring along.

If too many of us seem to be unemployed, we'll just re-redefine "unemployment" not to include most of them. If milk costs too much, we'll just re-redefine "inflation" not to include milk.

The economy (whatever the hell that really is) is in great shape!

weighs 500 pounds or more and doesnt stop stuffing its face

..capitalism is good with regulation , without regulation is what has caused this worldwide mess in labor, lost jobs, manufacturing, mortgages, energy ...and banking ...like paying 3.50 at an atm to find out what your bank balance is?
every area has been affected.

Unregulated Capitalism = Britney Spears, out of control

Why?

Because you (and others like you) are aware of 'something' wrong, and fail to dig deep enough for yourself to see what even many mainstream economists now are loudly touting (and for what personal gain?).

Here's a tip for ya:

I hear Citibank is on the up and up and you can get in on a really good price right now! Kramer's callin' it a BUY!

I wouldn't doubt it either if you bought into the WMD's in Iraq bullshit, if only for a minute or two...

economically and as much as they can.

We dont wish anyone bad fortune - we share what we find out, and you are right -
all the economists are talking recession...but I personally think as the next two years go by, it's going to be a lot worse.

It's almost funny that all the wall street people go around asking "are we in a recession, is a recession coming"

They're so out of touch with what's going on in the country outside of their own little world. Countrywide CEO the major pusher of the subprimes walks away with 88 million dollars. Wall street gave out billions in bonuses in December. They dont seem to be aware anything is wrong until they see the market fall 500 points in an hour. Or until one broker causes a 7 Billion dollar loss. Yes that happened today. Some very pale faces on CNBC today.

If a dem gets in, she or he'll have to be a genius to turn this around.

Clinton did it after boooooosh 1, but boooooosh 1 didnt come close to how bad his son has made this.

And we dont have another Clinton with an IQ of 165...although his Nafta Cafta certainly isnt so great...but he did pull us out of the first boooooosh disaster
and kept a good economy for the 8 years he was there.

Yesterday the fed cut the interest rate another 75 points.
Unheard of in 30 years or something.

BUT it is reported the fed is going to cut another 50 points on January 30.

Now does that sound like everything's hunky dory? No . They're cutting cause their previous cuts didnt help the economy for more than a day or two. And the printing presses go rolling along.

Frankly, the last year Clinton was in I sold off all stock. I only held onto one
MSFT and I saw it go down from 150 to 25. :shrug:

Buy Gold. the metal, not the certificates or stocks. Just in case. The dollar is worth 53 cents against the Euro . Europe and Asia dont want to take any more dollars. In case of the total collapse of the dollar like Germany, a little 1/20 or 1/10 ounce of gold coin will buy you groceries or gas. Anyway, that's what I think.