7
   

So how bad is it? Your take on the mortage crisis and the economy.

 
 
Reply Wed 20 Aug, 2008 08:11 pm
This graph tends to paint an ominous picture:

http://research.stlouisfed.org/fred2/data/BORROW_Max_630_378.png

What's your take?
 
cicerone imposter
 
  4  
Reply Wed 20 Aug, 2008 08:25 pm
Some of the banks and lending institutions have already written off billions in bad sub-prime loans, but we're probably at the mid-point of this debacle. I'd give it another two years or so to clean up all those bad loans, but the biggest problem is the consumer and government deficits that will weigh heavily on our economy for more than a decade. Not only is credit tight, but the banks are running out of money. When their cash flow suffers, the feds have to take over the bank to insure the money continues to flow.

We're still seeing over fifty percent defaults on mortgage loans in some parts of our country, and as people lose their jobs, that number is going to continue its upward trend. There are small pockets of areas that are showing strong growth, but they won't help the country as a whole.

I believe that the companies with good management will continue to show business growth - in the world market place. The lower dollar helps our country, but that's not the best way for our economy for the long-term.

One of the biggest problem for our economy is that we're not producing enough jobs for those people that are ready to join the work force. That means many high school and college grads will have difficulty finding jobs - exacerbated by the fact that more older people are working beyond normal retirement age, because they failed to save enough or their IRAs lost value during the past several years.

Let's cross our fingers and hope that not too many will struggle for too long during this economic downturn.
roger
 
  3  
Reply Wed 20 Aug, 2008 08:53 pm
@cicerone imposter,
Thanks for starting, CI. I stared at that graph for two minutes, and couldn't think of a thing to say. With the horizontal and vertical components at right angles, and essentially straight, there's really no past performance to compare it to.
cicerone imposter
 
  1  
Reply Wed 20 Aug, 2008 09:21 pm
@roger,
What it means is that most banks were in pretty good shape money-wise. With the sub-prime debacle, most banks had to write-off the bad loans from their books, because the borrowers were unable to pay on their loans as interest rates crept upwards. The banks were short on cash, and had to borrow from the federal reserve - big time.
0 Replies
 
Robert Gentel
 
  1  
Reply Thu 21 Aug, 2008 05:17 pm
@roger,
I'm having a hell of a time trying to figure what to make of it as well. It's hard to imagine the economic consequences at that scale, there's really nothing to compare it to.
0 Replies
 
hamburger
 
  1  
Reply Thu 21 Aug, 2008 05:25 pm
@cicerone imposter,
c.i. posted :



Quote:
Let's cross our fingers and hope that not too many will struggle for too long during this economic downturn.



you mean : KILL 'EM OFF QUICKLY ?
don't like watching the struggle , do you - GRIN AND CRY !
hbg
0 Replies
 
FreeDuck
 
  1  
Reply Fri 22 Aug, 2008 08:41 am
@Robert Gentel,
My take is a horrible sinking feeling.
0 Replies
 
parados
 
  2  
Reply Fri 22 Aug, 2008 09:22 am
@Robert Gentel,
My take is they probably didn't adjust for inflation in the graph.
JPB
 
  1  
Reply Fri 22 Aug, 2008 09:37 am
@Robert Gentel,
It's too soon to know of course but I think CI is right in terms of economic chaos. The mortgage crisis is only part of what we will be facing for the next 20 years or more as the boomers become elderly with no savings to support themselves and a generation of young people who depend on their parents for support well into their adult years. The times, they are a-changing.
0 Replies
 
Robert Gentel
 
  2  
Reply Sun 24 Aug, 2008 01:21 pm
@parados,
Even if they didn't (and I don't know because I found the image with little context) I don't think it would look much different. You'd still be looking at a right angle.
OGIONIK
 
  -1  
Reply Sun 24 Aug, 2008 02:48 pm
@Robert Gentel,
the whole idea of money is false, it has no value.

hence inflation, which will never stop until the monetary systems collapses, then we are forced to put value on items such as food, water, tools and the like.

yay for reality.
Robert Gentel
 
  3  
Reply Sun 24 Aug, 2008 02:57 pm
@OGIONIK,
Well I don't know about all that. You may just have a problem with the floating of the dollar (see "gold standard") because a return to commodity money is simply not in the cards.
OGIONIK
 
  -1  
Reply Sun 24 Aug, 2008 03:03 pm
@Robert Gentel,
i guess, money is only worth something because someone says it is worth somethin, period.
cicerone imposter
 
  2  
Reply Sun 24 Aug, 2008 03:06 pm
@Robert Gentel,
Commodity money will never work; how do you transfer commodity on eBay?
Robert Gentel
 
  1  
Reply Sun 24 Aug, 2008 03:08 pm
@cicerone imposter,
That's what I was trying to explain to OGIONIK. Commodity money has a bit of a portability problem, so if he doesn't like how much faith he has to put into the fiat money the US currently uses, he could advocate a return to representative money (gold standard) instead of commodity money, which is simply not a viable solution.
0 Replies
 
Robert Gentel
 
  1  
Reply Sun 24 Aug, 2008 03:11 pm
@OGIONIK,
That's an oversimplification, and really only applies to fiat currency. What I pointed you toward was the gold standard, a representative currency in which the money could be traded any time for a fixed value in gold.

That used to be the case with the dollar, but now it floats. And now it requires a lot more faith than it did as a representative currency.

But the thing is, all of that isn't really that related to this topic about the mortgage crisis and government bailouts.
0 Replies
 
 

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