Where is the US economy headed?

@maporsche,

Chaos at a level this world has never seen before.

@cicerone imposter,

Woah. That sounds bad.

Like what specifically would have happened? Maybe some examples of things that could have happened.

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And I should note that I am thinking of the liquidity injection to keep money from freezing as something seperate from the TARP legislation that was passed to bailout the banks.

I'm not yet certain that the liquidity injection was needed; but I'm 100% certain that the bank bailout was a failure. My main problem with the events of 2008/2009 start there. With Bush kicking the **** off and Obama running with it.

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@maporsche,

maporsche, Do you remember what happened several decades ago when the Thai bhat lost value? This small country's currency affected the whole world including the strongest economies including the US.

When the transfer of money stops in the international environment, buyers and sellers become very uncomfortable about doing business with banks, because they won't know whether they'll get paid or not.

In a world economy as we have today, the free-flow of money for commerce is a necessary component. Without it, all business transactions freezes to a stop.

Trying to restart this freeze will be almost impossible, because business people will not know which banks are trustworthy - and have enough cash to continue the flow of money.

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@cicerone imposter,

I was born in 79, and really didn't get into anything political until 2000. Regardless, I don't want to argue the point about the emergency liquidity injection. My posts previously to RJBs post were regarding the TARP bank bailout. That is where the majority of my problems lie.

I'm sure if we the money froze for a few days they probably would have cancelled Christmas. The worlds freshwater would have evaporated. The internets would stop working. 75% of Americans would die. And reality TV would take over the airwaves.

Thank god for Bush and his excellent crisis management (did those words just come out of my mouth? ptooey!)

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@cicerone imposter,

cicerone imposter wrote:

Chaos at a level this world has never seen before.

So, it'd be fair to say:

George Bush saved the world from chaos never before seen?

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@maporsche,

Quote:

And what would have happened if the banking system froze for a few days?

after a few days it would have been very difficult to " unfreeze " the banking system again because no one would trust one another .
who would want to accept a cheque drawn on the XYZ bank if you didn't know the bank was still liquid .
there is not enough cash to handle all transactions in cash . your employer could not pay you ( in cash ) . the supermarket would only accept cash ... ...
our banking system ASSUMES that a chaque we write will be honoured - or the system will break down .
international trade would also become paralysed if the banking system
" freezes " (it breaks down ) .
history provides ample evidence what happens when the banking/monetary system fails .

plenty to read for the next little while :

http://www.google.ca/search?sourceid=navclient&ie=UTF-8&rlz=1T4GGLJ_enCA233CA233&q=book+%2b+banking+system+failure

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@hamburgboy,

Look, not really wanting to argue this. This wasn't what I was referring to when I said I was against the bank bailouts.

But the solution to 'solve' our banking system was simply 'print some money'. WHY that instilled 'trust' in our banks is beyond my understanding.

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@maporsche,

Quote:

But the solution to 'solve' our banking system was simply 'print some money'. WHY that instilled 'trust' in our banks is beyond my understanding.

because you were still able to receive your pay ( interest , dividends ... ) and you were able to pay your bills , debt ... ... .
once the banking system breaks down ( no more money ) , it serves no useful purpose imo .
it is no longer functioning .

the banking system relies mainly on one thing TRUST - next would be probably be LIQUIDITY ! ( as far as i know - if i don't trust the banks , i'll have to store my wordly chattels in consumable goods - and hope no one breaks into my house to take these from me ) .

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@hamburgboy,

a somewhat late report about the " near collapse " of the british banking system .
which imo would have spread out from GB into foreign banking systems - since they are pretty well all interrelated .

http://news.bbc.co.uk/today/hi/today/newsid_8377000/8377989.stm

.

Quote:

The Treasury minister Lord Myners has defended the secrecy surrounding the £61.6bn Bank of England loans to HBOS and the Royal Bank of Scotland.

Lord Myners told Today presenter John Humphrys that it was "absolutely vital" that such operations should be undertaken covertly and rejected assertions that the secrecy surrounding the loans could have led to the high street banks "cooking the books".

And he admitted that "we know realise how very, very close we came to meltdown".
The existence of the loans was revealed yesterday by the Governor of the Bank of England, Mervyn King, and has brought criticism from opposition politicians and some shareholders in Lloyds, which was taking over HBOS at the time.

Lord Myners said the loans, made in the autumn of 2008, were kept a closely guarded secret. But he added that the board at Lloyds Bank and its advisers were kept fully in the picture.

"The board of Lloyds bank was fully in the picture," he said. "They knew exactly how much support HBOS was receiving, as did their advisers and their legal advisers, and they concluded that it still made a considerable amount of sense for Lloyds and HBOS to merge."

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I'm certain that the world would have survived had the banking system froze for a few days.

Life would have gone on. The sky would not have fallen. The earth would not have swallowed us up. The rapture would not have occurred.

I mean, I wonder HOW people survived before banks. We evolved with an ATM card in our hand for petes sake, how could we have survived?

This is the last I'm going to comment on the liquidity crisis though.

If you'd like to talk about the necessity of the TARP program, I'm all game.

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@realjohnboy,

realjohnboy wrote:

Unemployment numbers for December will be out Friday @ 8:30 am ET...
U-3 (the most widely reported stat) will drop from 10.0% to 9.8%.
U-6 (unemployment plus underemployment) will decline to 16.9% from 17.2%.
I think.
I am probably overly optimistic on U-6. Or both.
Watch the change in the length of the average work week.

Overoptimistic on bothU-3 and U-6. Still 10% unemployment, and more jobs were lost in December than expected. And unemployment would have been higher if more people had been looking for work instead of giving up. And U-6 actually went up 0.1% to 17.3, which is actually a broader measure of the dire unemployment and economy picture.

rjb, until we have an administration and Congress that are pro-business, the longterm outlook remains very dire. We need a president that is not Marxist at heart, and a Congress that ceases their ultra socialist policy moves.

http://www.foxnews.com/politics/2010/01/08/economy-loses-jobs-december-jobless-rate-stays-percent/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%253A+foxnews%252Fpolitics+%2528Text+-+Politics%2529

"Employers shed a more-than-expected 85,000 jobs in December as hundreds of thousands of people stopped looking for work altogether, reversing the slight gains from the month before.

Despite the losses, the unemployment rate held at 10 percent. The rate would have been higher if more people had been looking for work instead of leaving the labor force because they can't find jobs. "

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@maporsche,

maporsche wrote:

cicerone imposter wrote:

Chaos at a level this world has never seen before.

So, it'd be fair to say:

George Bush saved the world from chaos never before seen?

I was surprised though to hear CI make a statement like this though (basically).

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@maporsche,

I'm afraid you have no real understanding of commerce nor how the banking systems of the world maintains a "world economy."

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@cicerone imposter,

cicerone imposter wrote:

I'm afraid you have no real understanding of commerce nor how the banking systems of the world maintains a "world economy."

I'm equally afraid that you don't either.

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@maporsche,

That you have no understanding has been proven by your last post.

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@cicerone imposter,

I have no patience for people who stick to one liners and don't want to discuss the issues being discussed.

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@maporsche,

That's your problem; I've explained the reasons why banks are necessary for commerce, but you continue to insist banks are not needed for short periods. Wrong!

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@cicerone imposter,

And you know what. YOU really don't know what the impact would have been.

If the banking system froze. What then?
People don't get their paychecks for a few days. What then?

I suppose you think the next step is something along the lines of:

People would immediately begin starving and dying of starvation. The power companies would have shut down causing people to live in darkness. Food would have spoiled. Farmers would have destroyed all of their crops. Food animals would have been slaughted and burned. Houses would crumble, leaving people homeless. Cars would stop functioning and people would be stranded. H1N1 would have mutated and turned the nation in to zombies.

I mean, that would be chaos.

I think it comical that you're regurgitating what people are telling you instead of actually thinking about exactly what the consequences would be of a frozen banking system for a few days.

Hamburger listed some consequences. What are the consequences of those things happening? Would it have been really that bad? Would humanity not have survived?

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And NONE of this has to do with TARP. Which is what I initially was talking about.

You still don't have an answer why that was important. But don't worry, I've realized that you don't have any original thoughts. I'm not expecting an answer.

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Where is the US economy headed?

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