Where is the US economy headed?

@realjohnboy,

and the news from OFFICE DEPOT :

Quote:

Office Depot Inc. will close 112 underperforming retail stores in North America in the next three months, including its Overland Park store, leaving it with 1,163 stores, and close 14 more stores throughout 2009 as their leases expire, for a total reduction of about 10 percent of its North American stores.

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Circuit City is closing all stores. The number to be laid off must be huge.

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@realjohnboy,

realjohnboy. You have met me before I was exiled from these sites by the Nazis like Cyclopchitchron. You may have already learned, realjohn boy that the extreme left wing liberals on this site like Cyclops are the real NAZIS. If you want to find out what people like him are really like, check out Jonah Goldberg's book--LIBERAL FASCISM.

You see, realjohnboy, they talk a good game about "inclusion" and "freedom of speech" and "the marketplace of ideas" but like Cyclops, they become very frightened when, as I have done in several posts, you set up arguments that they cannot handle. Then, like the brave pussycats that they are,they announce that you have wounded their frail egos.

Cyclops is supposedly a failed PHD candidate from Berkeley--the nut house in California which masquerades as a Univeristy. He hasn't learned very much because he is unable to debate with a guy like me who only has a Master's Degree from the U. of Chicago.

Now, to your comments---I think you are correct about the Dow and the 6,000 level. The PE ratio would drop so far that even in this economic climate, millions would buy undervalued stocks. But one can never say never.

As I mentioned in a previous posting, those who predict gloom and doom will not tell you that:

l. Carter's era( A Democrat) gave us 10% Unemployment.

2. The Dow was 3,000 in 1994. Now, it is around 8,200. That is a pretty good gain for 14 years.

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@genoves,

genoves wrote:

Now, to your comments---I think you are correct about the Dow and the 6,000 level. The PE ratio would drop so far that even in this economic climate, millions would buy undervalued stocks. But one can never say never.

Whatever. I try to be gracious and as thoughtful as I can be considering I am a dumb redneck from the mountains of VA with no degree from Chicago or Berkeley. I have no interest in getting involved in hurling juvenile insults at others under what ever names yall use.

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@Advocate,

Just a word of caution on the closing of Circuit City. They will be holding all kinds of sales, but be very careful concerning their prices, warranties, and inability to return defective products. "Cheap" might end up costing you much more than the price of the product you buy.

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@cicerone imposter,

Quote:

I said it was necessary to keep cash and credit available in our economy. Big difference.

keep in mind that credit was fully available during the last depression, it went unused because would be borrowers did not have enough confidence in the future to allow them to make the bet that they could turn more value out of money than they would owe in money. I don't see what we are buying with our several trillion dollar effort to thaw credit markets, for paying off those who caused this problem. i would rather have put all that money into a jobs corps type programs. Save the weakest and/or most innocent first, i say.

If you think that there has been any problem with money supply I would like to know what reports you are looking at.

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@genoves,

Quote:

I hope that it is not headed for the 10% Unemployment under the esteemed Jimmy Carter. I KNOW it is not headed for the 17% under FDR AS LATE AS
1937

I would like to see an apples to apples comparison. The problem is that over the last two decades our government has had a propensity to play games with economic numbers, particularly the unemployment and inflation numbers. If we factored the unemployment number as we did in 1937 what would the number be today? Nobody knows. I do know that there has been a lot of head scratching by the pros as to why the current number is not worse, and a lot of feeling from the man on the street that the situation is far worse than the number implies. So far the man on the street is the one with the history of being right. Remember back to last summer when then masses felt that things were going bad fast and the pros said that there was no rational basis for the negativity because the numbers looked pretty good??? Well the pros had a come to Jesus meeting after the bottom feel out of this economy in sept, and decided that we had been in recession all during the earlier part of the year, only then did the pros capitulate to the wisdom of the crowd. These are the same pro's who tell us that we have no choice but to sink trillions of our kids and grand kids money into this failed financial system, why anyone believes them is beyond me. In fact i have seen some polling that suggest that close to a majority does not believe them, but we as a society are racking up the debt anyways.

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@hawkeye10,

hawkeye, You fall into the same trap of many who look backwards into history from three-quarters of a century ago. Today's economic environment is much different not only for Americans but for the world. Many people still have good credit ratings, but banks have met the demand required by businesses and consumers. The only way our economy will survive is when people can borrow to buy the goods we find in shops and car dealers. Home sales fits into the same scenario; most do not have the cash to buy any home with cash.

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@cicerone imposter,

you are not a young man, you should know better than to expect debt to be seen as anything but a chain around the neck. It will take a few years, but anyone in debt will see how much debt can hurt. first off this year will be loads of companies that went through leveraged buyouts, which soon will be bankrupt and mostly go out of business. Individuals will continue to see their debt options removed, and will increasingly have trouble staying solvent. The last depression taught almost everyone the importance of making due with what one has, and of using debt as little as possible, this one will be no different. Your claims of modern exceptionalism, that this time will be different, is wishful thinking at best.

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@hawkeye10,

If the government does nothing, the economy will continue to tank and hurt more people. Most people's IRAs and 401ks have lost their value in addition to the value of their homes. Many continue to lose their jobs and homes. How do we stop this crisis without the government pumping more money into the system?

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@cicerone imposter,

cicerone imposter wrote:

How do we stop this crisis without the government pumping more money into the system?

You don't stop it by throwing more money into a failed business or government model of how to encourage business.

Unless we address the foundational problems, the problem will not be solved. So far, I do not believe government recognizes the foundational problems, thus we are unlikely to solve them until it does, or we as a people do, and elect the people that know how to fix it.

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@cicerone imposter,

Quote:

How do we stop this crisis without the government pumping more money into the system?

you can't stop the pain, it is the just result of our foolishness, and it is needed to teach. Just as the child learns not to touch a hot stove by getting burned we need to learn again about the dangers of debt. The last lesson has worn off, as almost all who were adults at the time are gone. Those who know about personal trauma know that the way out of pain is through the pain, trying to run from pain or put pain off never has a positive lasting effect. same here, pain is not the problem it is an aid to helping us find the solution. If we put together a new financial system and it works then the pain will go away, if it does not then our new system sucks and we will need to try again. The days of avoiding consequences for our acts is over, it is time to learn that we can't always cheat when a game does not go our way. This myth that we can use debt to spend our way out of this crisis is born from the minds of leaders of a generation (baby boomers) who absolutely refuse to deal with reality that disagrees with their happy-go-lucky program. They need to understand that capitalism does not work if the negative side of risk is not allowed to work, if bad choices don't hurt.

BTW- I am not talking about government doing nothing, i am talking about government reinventing a economic system, that is a lot of something.

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@cicerone imposter,

What cicerone imposter apparently does not know or realize is that that most of the people who have LOST their homes should not have been in one to begin with. It is not usually a good idea to go into a home with no money downcovered by an ARM.
How many homes are in the USA? try 82,000,000. How many are in foreclosure?
Cicerone Imposter apparently never studied Economics.

In my area, homes gained about 5% a year up until around 2000. If you purchased a home in 1986 for $200,000, it grew to about $400,000 by 2000.
Then, to quote, the great Greenspan, irrational exuberance set in. Many homes grew at the rate of 10% a year. The $400,000 dollar home grew to $800,000 by 2008. RIDICULOUS!!!!

Now, the morons cry that their homes are devalued. NONSENSE. They are at the level they should have been all along. Those that were $400,000 are now at $600,000. Only morons who know nothing about Economics and the effects of loose mortgage requirements feel that they have really lost a great deal in the house values.

Cicerone Imposter apparently is unaware that the 401 K's and IRA roughly mirror the Dow Jones. In 1994, the Dow Jones was at a 3,000 level. Now, it is around 8,000. That is a nice gain over 14 years in anybody's book. Only imbeciles feel that they have LOST value. Their investments are back at a 5% per year growth where they should have been

Try reading a good Economics book, Cicerone Imposter. It may help you!

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@genoves,

Why talk about what happened in the past: it's too late now. All those banks and finance companies are at fault for creating this cash crisis. If you're so smart, what are the solutions to solve this mess?

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@genoves,

genoves wrote:

Quote:

Cicerone Imposter apparently is unaware that the 401 K's and IRA roughly mirror the Dow Jones. In 1994, the Dow Jones was at a 3,000 level. Now, it is around 8,000. That is a nice gain over 14 years in anybody's book. Only imbeciles feel that they have LOST value. Their investments are back at a 5% per year growth where they should have been

My wife and I are just fine, thank you. Our retirement funds are still worth much more than what we invested in them. What I'm speaking to are those many millions of folks who were planning to retire soon, but found that their 401ks and IRAs are not worth what they expected to retire as they planned.

I sold 30% of our equities when the market hit over 14000, and purchased back some when it hit 8500. We still have more than half in money market funds in the event the market hits a new low - such as 7500 - to purchase back some more.

My planning has been terrible; I've seen most of the world (just returned from a 26-day cruise of the South Pacific), my wife and I purchase new cars during the past two years, made major renovations on our home costing over $100,000 last year, and we still some money in the piggy bank.

I'm also planning to help our son in Austin buy a home this fall. Yup, we're one of those "down and out."

Yup, never studied economics, but managed to work in the management ranks for 27 out of the 30 years I worked in my career. I'm just a big fat failure.

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@hawkeye10,

You still haven't provided a viable solution for our money crisis.

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@cicerone imposter,

poor Cicerone--You are far too simplistic. The blame is spread around to many people. Republican legislators, Democratic legislators, banks, finance companies,etc.
The solutions? The taxpayers are the ones who are bailing them out now.

The reasons this happened--THE MAJOR REASON?

Slick Willie and other left wing morons decided that it would be good for anyone to own their own home. Out with redlining, they said. The finance companies accepted every person who wanted a home, let them have a home with NO money down and attached a horrendous payment schedule to the mortgage. Many of these mortgages were then sold to large banks who, in many chopped up these mortages so that the risks were spread around to a large number of large banks.

Look up the role of the esteemed Barney Frank and Senator Dodd in their dealings with Fannie Mae and Freddie Mac. You will learn something.

But, never fear. The smartest, most charismatic and most moral and patriotic President in the last hundred years, Barack Hussein Obama, will easily solve all of those problems. He said he would, didn he?

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@cicerone imposter,

I am happy you are doing well, Cicerone. I never implied that you were not doing well. Indeed, if you ignore some of the left wing rabble rousers in the NY Times, you will find that only a small percentage of the American people, who should have never ever been allowed to go into a home with no money down are the ones who are hurting. They brought it on themselves.

Actually, most people in the USA are like you, Cicerone. Doing well and proud of it,having earned it in a hard working lifetime.

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@hawkeye10,

hawkeye wrote:

Quote:

This myth that we can use debt to spend our way out of this crisis is born from the minds of leaders of a generation (baby boomers) who absolutely refuse to deal with reality that disagrees with their happy-go-lucky program. They need to understand that capitalism does not work if the negative side of risk is not allowed to work, if bad choices don't hurt.

There was a time when I would have agreed that adding more cash by the feds to our economy only damages capitalism, but just look at what happened when from the 90s, American productivity continued to increase, but the workers didn't gain in relative wages and benefits, and most of the rewards went to the CEOs and stock holders. Nothing was done to correct this greed, and the American consumer only learned how to borrow and spend because easy credit was available. Some people had 20 credit cards in their wallets. It was a whole culture that went berzerk, and the pays and bonus for CEOs increased at multiples not seen before. All the while, the government failed to rein in the sloppy lending practices that allowed every tom, dick and harry to buy a home even though they couldn't afford it. At the same time, the banks and lending institutions were repackaging these instruments as triple-A derivatives, and being sold and resold at huge profits. It was only a matter of time when the dam would break.

Fraud and scams became rampant; get rich quick schemes became the norm.

We're all now paying; some have lost everything they had. Even the rich are now poor. Thousands of jobs are now being lost every week. It's going to be very difficult to stop the leak in the dam; the flow is getting bigger every day, every week and every month.

What is the best solution?

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@cicerone imposter,

oh, ye,of little faith. President Obama, certainly the most intelligent, charismatic, moral and patriotic president of the last hundred years will lead us out of this mess.

However, again, I find your generalizations unsupported.

You say-"Some have lost everything they had" Some? How many? and why did they lose everything they had? Are the idiots who purchased homes with no money down?
Thousands of jobs are being lost ever week, says Cicerone.
Did you miss the Carter years when Unemployment reached 10%, Cicerone?
We survived.

Don't worry. President Obama will stop the "leak in the dam" and if he doesn't he can blame Bush!

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Where is the US economy headed?

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