Where is the US economy headed?

@hamburger,

hamburger wrote:

i wonder how okie might react IF he had some money saved in a bank account .
the bank goes bust AND the FDIC declares : `sorry , we are broke ! nice knowing you ! ` .
(btw that is not an impossible scenario - the FDIC does not sit on a sack of money , ready to pay on short notice).
hbg

Pretty sure the FDIC owes something like 100x times it's cash reserves, if the **** hits the fan. Inflation is the only option.

Cycloptichorn

1 Reply

@Cycloptichorn,

Guaranteeing FDIC insured accounts is necessary, uninsured businesses and banks, no. If I have a business and it fails, nobody would show up at my door with a wheelbarrow load of money. I suppose if Obama likes the business, he might "nationalize" it.

2 Replies

@okie,

okie wrote:

Guaranteeing FDIC insured accounts is necessary, uninsured businesses and banks, no. If I have a business and it fails, nobody would show up at my door with a wheelbarrow load of money. I suppose if Obama likes the business, he might "nationalize" it.

Yes, but what do you think happens to you and your family when the business fails? Do you just vanish into midair?

Nope, you have to try to get a new job - along with millions of others - and probably end up on the Dole. The idea that there are no ramifications to such things is a lot more complex then you make it out to be.

Now, I'm young, intelligent, attractive, and have more debt than savings. So if you ask me, I agree with you; let 'em fail. I have very little to lose in financial terms. But surely you understand why not everyone feels that way?

I wonder what would happen to you, if your life savings, if the banks 'failed,' the FDIC couldn't pay, and you were left with nothing.

Cycloptichorn

1 Reply

@hamburger,

Here's a link to FDIC and how they are handling smaller banks that go under:

http://www.fdic.gov/bank/historical/bank/index.html

The latest in the news is in California and the FDIC acted quickly for a take-over.

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@Cycloptichorn,

Cycloptichorn wrote:

okie wrote:

Guaranteeing FDIC insured accounts is necessary, uninsured businesses and banks, no. If I have a business and it fails, nobody would show up at my door with a wheelbarrow load of money. I suppose if Obama likes the business, he might "nationalize" it.

Yes, but what do you think happens to you and your family when the business fails? Do you just vanish into midair?

Good grief, cyclops, read an economics book about free markets. Are you that ignorant? That is how economies adjust efficiencies, otherwise buggy whip manufacturers would still be proliferating. I can't believe the stupid statements you make here.

Quote:

Nope, you have to try to get a new job - along with millions of others - and probably end up on the Dole. The idea that there are no ramifications to such things is a lot more complex then you make it out to be.

See the above answer. Nothing is guaranteed for life, cyclops, adjustments are needed.

Quote:

Now, I'm young, intelligent, attractive,

Thats probably a matter of opinion for sure.

Quote:

....and have more debt than savings. So if you ask me, I agree with you; let 'em fail. I have very little to lose in financial terms. But surely you understand why not everyone feels that way?

I wonder what would happen to you, if your life savings, if the banks 'failed,' the FDIC couldn't pay, and you were left with nothing.

Cycloptichorn

The FDIC should pay, the accounts are insured. If the government cannot insure these accounts, then its over in my opinion, anyway.

But in regard to the businesses, including banks, the best way to keep the economy strong is not to prop up failed business models with taxpayer money, the way to keep it strong is to let the weak and flawed businesses to fail, the ones that are run inefficiently to fail, so that the managers actually learn something, to learn how to economize and make more efficient, and to allow the efficient ones to profit from their good decisions and sound business practices. In so doing, other people that want to succeed will pattern their business practices after the successful ones. As it is, bailing out failures not only perpetuates a failed business model, but it encourages future businesses to use the same bad patterns of doing business. For free markets to work efficiently, failure must be allowed, that is part of what causes change toward higher efficiency and a higher standard of living.

Read Thomas Sowell and you would not have to endure my economics lesson here in some of the most basic common sense about this.

1 Reply

@okie,

It seems the banking industry as a whole disagrees with your assumptions. They (banks still working well) are buying the banks assets that have been closed.

Do you ever get anything right?

1 Reply

@cicerone imposter,

Fine, let them do it, but just don't let them do it with tax money, government bailouts.

Another aspect of this that should go along with my above post is the fact that government needs to evaluate how they may have induced businesses to fail, due to bad regulatory practices and over burdensome taxes, propping up unions that violate supply and demand principles, etc. This is a huge thing.

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@okie,

okie, Your attempt to blame the past on what happened is too late. It's done.

2 Replies

@cicerone imposter,

Tens of thousands more layoffs are announced
By JEANNINE AVERSA, AP Economics Writer Jeannine Aversa, Ap Economics Writer 2 hrs 2 mins ago

WASHINGTON " It's already been a lousy year for workers less than a month into 2009 and there's no relief in sight. Tens of thousands of fresh layoffs were announced Monday and more companies are expected to cut payrolls in the months ahead.

A new survey by the National Association for Business Economics depicts the worst business conditions in the U.S. since the report's inception in 1982.

Thirty-nine percent of NABE's forecasters predicted job reductions through attrition or "significant" layoffs over the next six months, up from 32 percent in the previous survey in October. Around 45 percent in the current survey anticipated no change in hiring plans, while roughly 17 percent thought hiring would increase.

The recession, which started in December 2007, and is expected to stretch into this year, has been a job killer. The economy lost 2.6 million jobs last year, the most since 1945. The unemployment rate jumped to 7.2 percent in December, the highest in 16 years, and is expected to keep climbing.

"Job losses accelerated in the fourth quarter, and the employment outlook for the next six months has weakened further," said Sara Johnson, NABE's lead analyst on the survey and an economist at IHS Global Insight.

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@cicerone imposter,

cicerone imposter wrote:

okie, Your attempt to blame the past on what happened is too late. It's done.

Those that fail to understand the mistakes of the past are doomed to repeat them. You made this argument quite some time ago, and I told you that you were wrong, and here you go again. We need to understand what caused the problem, otherwise we will not be able to solve it. It ends up being the blind leading the blind, and thats the way it looks to me, Washington does not have a clue about what they are doing because they fail to understand underlying principles that endure, and that have been violated.

3 Replies

@okie,

okie wrote:

Quote:

Those that fail to understand the mistakes of the past are doomed to repeat them.

okie, What lesson are you trying to explain to us? Are you just learning this, or are you trying to provide us with some new truths? LOL

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13.5% of American workers are in unions -- pitifully low and hardly a major cause of a recession, just one of the conservative Republican's petty pet peeves. I defintely think that laying off workers is the order of the day and picking on the highest paid instead of executives giving up their wildly decadent high living standards.

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@okie,

Quote:

Washington does not have a clue about what they are doing because they fail to understand underlying principles that endure, and that have been violated.

Yes, but you are qualifying the remark. They understand the fundamental principle that if they leave the economy to swing in the wind they could end up swinging in the wind themselves.

We have built up a system not unlike an elaborate structure of playing cards and if it falls there will be no food in the shops and the lights will all be out. All of a sudden too.

You cannot have the benefits of our elaborate and interconnected institutions without taking that risk.

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@okie,

okie wrote:

Quote:

Fine, let them do it, but just don't let them do it with tax money, government bailouts.

Another aspect of this that should go along with my above post is the fact that government needs to evaluate how they may have induced businesses to fail, due to bad regulatory practices and over burdensome taxes, propping up unions that violate supply and demand principles, etc. This is a huge thing.

Are you trying to tell us that the economic team that Obama established doesn't know what they are doing?

If you are so intelligent and well informed about our economy, what are your solutions for our economy?

But first, what is your education and experience background on national economic systems and how they work or don't?

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@okie,

Okie, what is that enduring principle to which you refer? Is it that the govt. can balance the budget by spending big-time and cutting taxes at the same time?

Amazingly, the Reps have still not learned that supply-side doesn't work.

1 Reply

@Advocate,

Trickle down? As in, pull it out and piss on everyone else?

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@okie,

Quote:

Thats probably a matter of opinion for sure.

Better looking then your wrinkled old ass. Of that there's no doubt.

Quote:

The FDIC should pay, the accounts are insured. If the government cannot insure these accounts, then its over in my opinion, anyway.

Okie, let me clue you in on something: if the banks all fail, the FDIC cannot cover 1/100th of the amount they owe. The FDIC is not magic. We would have to print up staggeringly huge amounts of money and inflation would be unbelievable. Thousands and thousands of businesses would fail and unemployment would be through the roof so it would be extremely difficult to get a new job.

You are applying extremely shallow reasoning to the problem; think deeper!

Cycloptichorn

3 Replies

@Cycloptichorn,

I do not think he is capable of deep thinking. His off the cuff remarks more often then not has no evidence to support it.

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@Cycloptichorn,

cyclo wrote :

Quote:

Okie, let me clue you in on something: if the banks all fail, the FDIC cannot cover 1/100th of the amount they owe. The FDIC is not magic. We would have to print up staggeringly huge amounts of money and inflation would be unbelievable. Thousands and thousands of businesses would fail and unemployment would be through the roof so it would be extremely difficult to get a new job.

yep , that's about it !
since the FDIC (it's similar in canada) has its investments spread around , it depends on the underlying assets to pay out any claims ... if the underlying assets melt (global warming Shocked

) it's "goodbye , charlie " !

there have been proposals in the past that the FDIC should NOT guarantee 100% of the maximum amount .
the banks should be rated annually on the assets they hold and the guarantee would cover only a portion of the maximum up to 80% of the amount in insurable accounts .
that would allow the saver/investor to decide if inceased risk might be worth an extra 1 or 2 % in interest .
of course , the banks - particularly the weak ones - didn't endorse that idea .
hbg

1 Reply

@hamburger,

I'd go a step further and say that the FDIC insured banks should only be able to insure the amount of equity owned by the bank, but never zero. Since they must all pay into a fund to back the insurance, banks with more risk should pay more. That should keep the banks in line when it comes to over-extending themselves into risky investments.

0 Replies

Where is the US economy headed?

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