cicerone imposter wrote:As Richard Saunders said, "complete stupidity."
The depression we had back in the last century was at a time in the life of capitalism when very few industries existed. Today, we are all intermingled within the world economy with millions more employment opportunities; the increase in marketable products and services have grown exponentially to a point no one industry can do irreversible harm. The likelihood of another depression is almost impossible; although recessions are still a threat. As a matter of fact, IMHO, a recession is now in the making in the US because of the increasing debt load of consumers and the federal government.
It bears watching.
Well, I wouldnt be surprised if we had a great depression.. Actually I only think its a matter of time. But it may be an inflationary depression... The way we're going with our currency and credit and spending we're on our way there...
RichardS, I also think that the very wealthy and the bonds held by China and Japan are buffers to a great depression. They can't afford to buy everything up worth the money they own; not only is that not practical, but self-defeating; they possibly couldn't use all that stuff in their lifetime no matter how hard they tried, unless they gave it all away.
China and Japan has a problem of spending too much in the open market place for fear of exacerbating inflation; if the cost of goods and services increases (economics 101; supply and demand), everybody's economy will hurt - and in turn will decrease consumer spending. What will they do with all the products they produce if nobody can afford to buy them?
The world marketplace is a good equalizer, because prices can't get too high or too low.
The Chinese workers are the only ones suffering the consequences now, because their income doesn't allow them to buy imported goods; they're just too expensive for them. China can continue to expand their economy, but they end up hurting their own workers; they can't buy much in the world marketplace. That's a big problem for the Chinese. I'm not sure how long the Chinese worker is going to tolerate these low wages in a country where many are getting filthy rich.
maporsche wrote:cicerone imposter wrote:Intersting article in today's San Jose Merc about people earning $250,000/year are having difficulty with cash flow; most are living from paycheck to paycheck. Not all bad news, though, because it seems some are at least putting away some of it into their savings.
As you already undoubtedly know CI, our nation has become a spend, spend, spend economy full of a need for instant gratification. I have never lost more respect for a people as when I heard president Bush say, after 9/11 that American's just needed to spend more money.
He said it again on 12/20/2006, see the video here:
http://thinkprogress.org/2006/12/20/bush-shopping/
What a bunch of selfish, superficial people we American's are becomming.
It is a known fact that there is never enough to satisfy everyone's wants, no matter the income. That has been the case since the very first commodity was ever made and traded, perhaps by cavemen. That is what describes an economy, but I agree that one of our biggest problems is too easy credit, and the banking industry is looking out after their interests, not necessarily those of their customers, which is the way it has always been, and is not necessarily the main problem. The main problem is we still have the power to say no, after all its a free country, but the citizenry is not saying no often enough. I think we need to do a better job educating young people to the pitfalls of borrowing. And the government is not setting a good example, so what else can be expected?
okie wrote:It is a known fact that there is never enough to satisfy everyone's wants, no matter the income.
More of okie's "known facts" ?
Many people are capable of satisfying their wants with the income they have. How often do we read stories of people who lived frugally but left millions when they died? Often enough to make okie's "known fact" about "everyone's wants" be not true. Many people have come to realize that income is NOT the way to satisfy their wants. Income is there to satisfy needs. Those that haven't figured that out will never be satisfied because happiness can't be bought no matter how much money you have.
parados wrote:Many people are capable of satisfying their wants with the income they have. How often do we read stories of people who lived frugally but left millions when they died? Often enough to make okie's "known fact" about "everyone's wants" be not true.
I don't see how your facts refute Okie's point. Savings on your bank are as much of a want as, say, sports cars in your garage, yachts in the harbor, or trophy escorts in your bedroom.
Except okie equated "wants" with commodities that are purchased.
Quote:That has been the case since the very first commodity was ever made and traded, perhaps by cavemen.
I sincerely believe okie 1) lives in another world, 2) has very little knowledge on any subject, and 3) believes his opinion has intrinsic value.
Quote:June 19, 2007
Seventy Percent of Americans Say Economy Is Getting Worse
Other measures more negative as well
http://www.galluppoll.com/content/?ci=27922
This is because for most Americans, the economy IS getting worse. They can't afford a house, because the prices are too high. Credit card interest rates are through the roof thanks to Senator Biden (D-MBNA) and the others who passed the horrendous Bankruptcy bill. Salaries have barely risen in the last 7 years. Energy prices and food prices are considerably higher, health care costs higher, it seems EVERYTHING costs more.
Those at the top are doing well, and noone else. Or if they are doing better, it is a marginal improvement.
Cycloptichorn
New housing starts for May were down a modest 2% vs April. But May 2007 was down some 20% from May 2006. That is nationwide.
Here in Virginia, red flags are going up as the states' revenues are coming up short by some $300 million for the fiscal year that ends in a coule of months. The culprits are said to be sales tax revenue (fewere new houses equals less money spent on building materials, appliances etc). The other item mentioned is much larger than expected state income tax refunds. I haven't figured that out.
$300 million aint a whole lot for a state this size, but Virginia is a "pay as you go" state, meaning we can't run a deficit. A lot of spending scheduled for next year is being scaled back.
rjb, There's a mysterious phenomenon going on in our county; sales are down, construction is up, and prices increased 5% since 12 months ago.
It seems that the high tech and biotech companies are hiring, and adding workers in our area. However, unemployment rates doesn't move much up or down. Low price homes are not selling, but the ones in good neighborhoods are still in demand. Interesting to say the least.
Hewlett Packard used to have a huge campus not one mile from where we live. Those buildings are now sitting empty. If I'm not mistaken, Apple Computer purchased that property, but no renovation or rebuilding in the works - as far as we can tell.
cicerone imposter wrote:RichardS, I also think that the very wealthy and the bonds held by China and Japan are buffers to a great depression. They can't afford to buy everything up worth the money they own; not only is that not practical, but self-defeating; they possibly couldn't use all that stuff in their lifetime no matter how hard they tried, unless they gave it all away.
China and Japan has a problem of spending too much in the open market place for fear of exacerbating inflation; if the cost of goods and services increases (economics 101; supply and demand), everybody's economy will hurt - and in turn will decrease consumer spending. What will they do with all the products they produce if nobody can afford to buy them?
The world marketplace is a good equalizer, because prices can't get too high or too low.
The Chinese workers are the only ones suffering the consequences now, because their income doesn't allow them to buy imported goods; they're just too expensive for them. China can continue to expand their economy, but they end up hurting their own workers; they can't buy much in the world marketplace. That's a big problem for the Chinese. I'm not sure how long the Chinese worker is going to tolerate these low wages in a country where many are getting filthy rich.
I would tend to agree with you more IF we didnt have a fiat currency. When all the countries based their currency on gold - it was a self equalizing process.. now, with the ability of any central bank to pump out unlimited ammounts of currency, inflation and prices will continue to rise.. there are no longer any checks on the politicians.
Cycloptichorn wrote:Quote:June 19, 2007
Seventy Percent of Americans Say Economy Is Getting Worse
Other measures more negative as well
http://www.galluppoll.com/content/?ci=27922
This is because for most Americans, the economy IS getting worse. They can't afford a house, because the prices are too high. Credit card interest rates are through the roof thanks to Senator Biden (D-MBNA) and the others who passed the horrendous Bankruptcy bill. Salaries have barely risen in the last 7 years.
Energy prices and food prices are considerably higher, health care costs higher, it seems EVERYTHING costs more.
Those at the top are doing well, and noone else. Or if they are doing better, it is a marginal improvement.
Cycloptichorn
That is because we do not have sound money. Everytime the govt increase the money supply prices go up. The general populace is getting screwed from the inflation tax and nobody even realizes it.
It is truly the secret tax. The only politician who talks about this stuff is Ron Paul.
Cyclo, I see interest rates going up in conjunction with the price of bonds going up; a very unusual occurance in the bond market. This will reflect the outcome of sloppy lendings by institutions who thought they could make a quick buck in the sub-prime marketplace with low introductory interest rates. They "sold" these loans to people who couldn't afford to buy in the first place, and to speculators who tried to turn them for profit. Most didn't have the "cash/assets" or future earnings to even buy those properties.
A few big firms got burned for getting sloppy; and that's a good thing. They'll think twice in the future before they reintroduce the sub-prime market. they have no business selling loans to people who can't afford it.
Burn, baby, burn.
Just to bump this thread up to the top for a day or so.
It ticks me off to hear each month that inflation EXCLUDING THE VOLATILE FOOD AND FUEL SECTORS is always tame. Every month. Everything is doing just fine.
Everything is fine as long as you don't have to drive or eat.
But what got me riled today was hearing that, while gas prices have settled down to around $3.00/gallon, we should expect milk prices to hit close to a record price of $3.50/gallon. There are a number of factors in play. Drought in Austalia has reduced milk supply. Corn prices are at near record highs as more of that product is going into fuel production. The demand from the Chinese market for dairy products is increasing dramatically, despite the fact that the exchange rate between the yuan and the dollar makes imported goods to China more expensive.
It is no wonder to me that that there is a negative expectation ahead as pointed out in the graph above.
What I find interesting about the above graph is that as recently as in the fall of last year, 68% of Americans thought the economy was "getting better" even as more Americans lost their health insurance, and more middle class families fell into poverty. This was before the housing market downturn, but people can't spend their equities without incrasing their loans with higher payments. I guess it finally caught up with them.
Realjohnboy, concerning food prices, ethanol is one of the culprits. Not only does it drive the price of corn up, which is not only contained in numerous human food products, but also is contained in food for livestock, which affects milk prices among many other things. Not only that, but more corn is grown at the expense of other crops, such as soy beans, which drives the price of food products with soy. There are many other crops affected as well. The net result is that all farm products / food products suffer inflationary trends. All of this so that we can burn about as much fuel or more fuel than we can extract from ethanol in the process of making it and transporting it. This would all be fine and dandy for some people, some farmers, but if you believe we should go around breaking windows so that glass repair people can get rich, it might make sense.
This is only one illustration of the insanity of artificial manipulation of the free market, such as huge tax breaks to build ethanol plants, which activates unintended consequences in many ways. Proof once again that politicians are basically stupid and repeat the same mistakes over and over again.
One argument we hear is that hey, we can cut down on imported oil. However, what if we end up importing more food, which is what will happen if domestic food production cannot compete as well? Which is worse, importing food, or importing oil?
The ethanol fuel gig is a political short-sighted exercise in stupidity which will create more problems than it ever could solve.
I (gasp) agree with you, okie, on the corn-based ethanol thing. It makes no sense to increase prices in one sector: food (dairy, beef etc) in order to reduce costs in another: fuel.
Ethanol may be viable, but not if it can only be produced by diverting resources from some other use.
I recall hearing a story of some high school kid whose school got a permit to build a still to produce ethanol from kudzu. Do you know kudzu?
