Where is the US economy headed?

@hawkeye10,

You talk about "new" as if anybody on this planet knows how to create it.

@cicerone imposter,

you start with known flaws and go from there...

for instance

Quote:

Michael Lewis (Vanity Fair)reports from Iceland, whose banks recently committed "one of the single greatest acts of madness in financial history," racking up losses average to "roughly $330,000" per Icelander. In the pantheon of textbook bubbles, an economist places Iceland's financial saga, in which ever-rising asset prices encouraged overleveraging, alongside the Dutch tulip craze. Some foresaw the subsequent crash, but few spoke up. "The people who saw it coming had more to gain from it by taking short positions than they did by trying to publicize the problem." Pop-anthropological explanations include Iceland's prior reliance on fishing and the bizarre relationship between the sexes there. ... An author reconsiders the American Dream, concluding, "Our expectation of what the dream promises" must become more "egalitarian." In the past half-century, the dream morphed from solidly middle-class and attainable to increasingly reliant on credit, until, aided by Reagan-era deregulation, it turned "immature, individualistic."

http://www.slate.com/id/2213122/

We see this all over the place...the culture of greed taking over and the profit from not publicizing and dealing with problems corrupting civilization. We do stupid things because there is profit in in for those who decide, and that is a huge problem that needs to get fixed. I could go on with other examples , but you get my point....

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Quote:

GM's Nuclear Option: Bankruptcy
By Bernhard Warner and Matthew Yeomans
Posted Friday, March 6, 2009 - 4:09am

Today's Business Press
General Motors is having second thoughts about the benefits of bankruptcy"as long as it's speedy and the government can finance it, the Wall Street Journal reports this morning, citing a source in the know. Last month, the ailing carmaker claimed Chapter 11 would be far more costly as it lobbied for a make-or-break bailout No. 2. "The change in thinking, combined with the disclosure Thursday that GM's auditor has raised 'substantial doubt' about the car maker's ability to keep going, appears to move GM closer to the possibility it will file for reorganization," the newspaper writes. Part of the change in heart is that GM is playing a game of beat-the-clock. It is not only locked into tense negotiations for an additional $30 billion in aid, but it also must close a deal with its bondholders by the end of the month. The bankruptcy route"a sort of nuclear option"could "prod bondholders into making concessions," the WSJ figures.

There's no denying things look bleak at GM. On Thursday auditors slapped a "substantial doubt" tag on GM's windshield, saying even if it received the entire $30 billion it hoped to borrow from the federal government, survival is far from guaranteed, the New York Times writes. Business Week doesn't help GM's case, pointing out that the carmaker's pitch for aid is partly based on a projection that the auto-buying market will return to boom time levels within three years.

http://www.thebigmoney.com/features/todays-business-press/2009/03/06/gms-nuclear-option-bankruptcy

This is good, because the only way to save GM is to put it through bankruptcy. The main problem is that parts suppliers need to get paid in full, by either GM or the Government, because they can't pay their bills as it is. Every other GM debtor (to include the employees) will have a problem with only the suppliers not taking a haircut.

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@hawkeye10,

That's not even close to any solution. What new kind of economy are you talking about?

Also, I don't know of any economic system that can be an improvement over capitalism. That greed took over the running of our banks and finance companies was based on a whole string of events that allowed this crisis to occur. If the government had done half the job they were supposed to do, this problem would not have grown into the current level. Madoff and Stanford is but a symptom of a larger problem when the government goes to sleep at the switch. When they continue to trade those mortgage derivatives, and the value kept going up, somebody who was supposed to be watching slept at the wheel. No economic problem is free from human greed and errors.

I want to hear about your "new" economic system that will completely suppress greed and fraud.

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@cicerone imposter,

If the government or other forces of the law actually uncovered all the fraud in business, not to exclude state and local governments, we'd end up swiftly as a third-world country. Remember Arthur Anderson, the huge crooked accounting firm? They had a huge building down the street from my house near Los Alamitos Racetrack (appropriate!) The building, of course, is not gone -- I think it's now Toshiba.

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@Lightwizard,

Yeah, I remember Arthur Anderson when they were involved with the Enron debacle. My first reaction was "good for them. they earned losing their jobs." But after a little reflection, my reaction was too much in haste; too many good accountants who didn't have anything to do with Enron lost their jobs.

I'm sure that also applies to many companies where the management screws up royally, and all the honest, hard-working employees lose their jobs through no fault of their own.

This recession will reveal which companies really has good management skills. I'm afraid the majority will go under because the decision making was lacking in the management and board of directors.

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@cicerone imposter,

It's hens being put in charge of the wolves' den. That is, hens with shredding machines.

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@Lightwizard,

Here's an excellent article on our economy.

http://news.yahoo.com/s/ap/20090307/ap_on_bi_ge/economy_where_s_the_bottom_2

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@cicerone imposter,

My head's been filled up with the economical "facts" (statistics always lie or are used by a liar) ad absurdum. As far as opinion, I often visit The Economist site.

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@Lightwizard,

I usually look at statistics with a grain of salt too! In trying to evaluate what's happening to our economy, I also look at what's happening in the world's economy.

There are some plusses, but not enough to make me feel secure for at least two or more years. I see that as the length of time it'll take to wash out all those asset holdings by the banks and finance companies, and to bring about some stabilization in the housing market.

As long as job losses continue as they have been during the past quarter, my optimism will fade much quicker.

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@cicerone imposter,

c.i. :

perhaps we can take comfort in this : "it's always darkest just before the sun rises " .
problem is , right now , no one knows when the sun will rise .

most canadian economists (in government , research and in the financial industry) seem to agree that :
- there will be an upturn in the economy ,
- when it happens , it will be a VERY SHARP upturn (just like the slide down) ,
- much will depend on china and other asian (and some say , south-american) economies ,
- giving a fixed date is impossible .

should cheer you up enormously !!!
hbg

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@hamburger,

That's the right attitude. What happened to seeing the glass half full instead of half empty? Everybody almost to the person is in the same boat and we just have to have pessimist drilling holes in the hull. I'm a skeptic which is a positive way to doubt. Negativism will only create more damage. Not that we should all be Pollyannas and insist nothing is wrong -- seems to me that lost somebody an election for sure. Know they enemy -- it's greed and corruption and needs major surgery.

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@hamburger,

Quote:

most canadian economists (in government , research and in the financial industry) seem to agree that

except for the ones who
a) think that the Japanese "lost decade" is the best model for our situation, of whom there are plenty

b) and those who think that the great depression and the depressions of the 1800's are a better model, of whom there are a growing number.

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@Lightwizard,

Quote:

it's greed and corruption and needs major surgery.

A mass conditioning of evolution theory would sort that out wouldn't it?

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@hawkeye10,

Both of those examples may have some lessons in them, but there has been too many changes in domestic and international trade for them to have much meaning.

I believe the best example for the US is WWII when our government spent money beyond their means; they pumped money into the military complex as if the world was coming to an end. That's the way our government must react now to the increasing job losses; find as many ways as possible to get people back to work. Never mind the deficit; that'll take care of itself when our economy picks up again.

It has everything to do with "our" security; spending money by the government is the only solution now. I only disagree with how they're spending the money; into too many programs that has nothing to do with the creation of jobs.

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@cicerone imposter,

Quote:

It has everything to do with "our" security; spending money by the government is the only solution now. I only disagree with how they're spending the money; into too many programs that has nothing to do with the creation of jobs

I assume that you also have a problem with this being legacy spending, these programs that are being capitalized will be very difficult to defund once the economy gets going again. FDR made sure that the spending was done though temp agencies that could be eliminated as soon as was prudent, but the Obama spending is going though normal government agencies in many cases for programs that citizens want, and there will be extreme pressure to continue to fund these programs even after the stimulus excuse is no longer credible. Obama has seriously errored, in giving new evidence that government can not be trusted to tell the truth. this was false advertising to the same degree of Bush's promotion of war in the Middle East.

this is part of why the Obama plan is being dimissed by the private sector...it gives all evidence of political gamesmanship, it is not a serious attempt to deal with the economic problems as the economic problems are not the major player here. The Raum Emanuel doctrine is "never let a crisis get in the way of a political opportunity" and it is clear that he completely sold Obama.

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@hawkeye10,

hawkeye10 wrote:

Quote:
It has everything to do with "our" security; spending money by the government is the only solution now. I only disagree with how they're spending the money; into too many programs that has nothing to do with the creation of jobs

I assume that you also have a problem with this being legacy spending, these programs that are being capitalized will be very difficult to defund once the economy gets going again. FDR made sure that the spending was done though temp agencies that could be eliminated as soon as was prudent, but the Obama spending is going though normal government agencies in many cases for programs that citizens want, and there will be extreme pressure to continue to fund these programs even after the stimulus excuse is no longer credible. Obama has seriously errored, in giving new evidence that government can not be trusted to tell the truth. this was false advertising to the same degree of Bush's promotion of war in the Middle East.

this is part of why the Obama plan is being dimissed by the private sector...it gives all evidence of political gamesmanship, it is not a serious attempt to deal with the economic problems as the economic problems are not the major player here. Emanual doctrine is "never let a crisis get in the way of a political opportunity" and it is clear that he completely sold Obama.

I wonder what you would believe is a 'serious attempt' to solve our economic problems.

Cycloptichorn

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@Cycloptichorn,

Quote:

I wonder what you would believe is a 'serious attempt' to solve our economic problems.

One that was honest, that was not used as cover for promoting an ideological agenda, and one that was supported by the markets. Private capital has given the global political leaders the thumbs down, consumers across the board have a decreasing level on confidence in their political leaders and in the economy.....this data can not be dismissed. The majority is sometimes wrong, but is much more often correct. The majority currently has not seen what they need to see to have hope that tomorrow will be a better day.

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@hawkeye10,

hawkeye, You're giving consumers too much credit for what you think they understand about the current crisis. They don't; what they are reacting to are the huge number of job losses without any end in site. They are all afraid of their own job security, because they know that the next step is being homeless and/or the soup kitchens.

I really feel sorry for all those fathers out there with young children; it's the worst stress any father can have today.

1 Reply

@hawkeye10,

hawkeye10 wrote:

Quote:
I wonder what you would believe is a 'serious attempt' to solve our economic problems.

One that was honest, that was not used as cover for promoting an ideological agenda, and one that was supported by the markets. Private capital has given the global political leaders the thumbs down, consumers across the board have a decreasing level on confidence in their political leaders and in the economy.....this data can not be dismissed. The majority is sometimes wrong, but is much more often correct. The majority currently has not seen what they need to see to have hope that tomorrow will be a better day.

Why do you care what 'the markets' support? You seem to forget that they supported the last scheme - right up until it crashed badly.

Private capital sees a change coming from the days where they made money hand over fist through fraud or lack of regulation. This means they will make less profits than before, and a lot of their current investments are sunk. The 'majority' in this case is not interested in what is best for the survival of our nation, but instead what is best for THEIR portfolio. You are 100% wrong in your estimation that whatever solution we come up with needs to make investors happy.

Cycloptichorn

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Where is the US economy headed?

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