Where is the US economy headed?

@H2O MAN,

H2O MAN wrote:

Indications are that we are already in a second recession and that Obama
is driving the US into it's second depression as fast as he possibly can.

If that is the case then it's a replay of 1937.
The GOP was wrong then and they are repeating history it seems by demanding the President cut spending at a time of economic fragility.

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Gold hit 1630 today.

That is all.

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@hawkeye10,

Could a U.S. debt downgrade trigger a financial crisis?

By Neel Kashkari,

Quote:

As we approach Treasury’s debt-ceiling deadline, attention has shifted from the risks of a default on Treasury debt to the risk of a downgrade of U.S. credit. Many are asking whether a downgrade could itself lead to a financial crisis. With the example of 2008 still fresh in many minds, the question has become: Would it be as bad as the Lehman Bros. bankruptcy?

Some market observers speculate that a downgrade would be a non-event: Japan, for example, went from a rating of AAA to AA without much drama. Others suggest that a downgrade would increase Treasury’s borrowing costs by $100 billion a year or more, making our already unsustainable deficit trajectory even worse
.
.
.

These factors suggest that a U.S. downgrade has the potential to be as bad or perhaps worse than the Lehman shock. The more strongly held a belief, and the larger the asset class it supports, the greater the potential damage to the economy when the belief is turned upside down. We may not be certain what will happen if U.S. credit is downgraded, but there is no upside to finding out.

The writer, a managing director of the investment management firm Pimco, served as an assistant Treasury secretary during the George W. Bush administration. He established and led the Office of Financial Stability and the Troubled Assets Relief Program until May 2009

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@hawkeye10,

Quote:

assistant Treasury secretary during the George W. Bush administration

How can anyone trust this guy from an administration that caused this Recession. Naturally they are going to put anything in bad light. How come when he was assistant Treasurer he didn't foresee the problems GWB was going to cause and avoid this mess?

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@hawkeye10,

No matter what happens from now on, there is no "upside."

All they have done is stymied what was a very slow recovery from the Great Recession.

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@cicerone imposter,

cicerone imposter wrote:

No matter what happens from now on, there is no "upside."

All they have done is stymied what was a very slow recovery from the Great Recession.

For most people there has been no recovery, the unemployment rate is stuck around 16%, our homes continue to lose value, fuel costs are stuck very high, and food ranges between expensive and very expensive compared to what we had gotten used to.

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@hawkeye10,

hawk, What I'm saying is that our economy 1) has not recovered, 2) there's going to be more bad news about our economy, and 3) anything you might wish to list is old news.

Unemployment rates are based on location - and this crisis only ensures it will get worse. Housing has been depressed since 2008 - generally speaking. There are pockets in the US where values has retained their value, but many more where they have lost value - never to see any recovery in the foreseeable future.

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@cicerone imposter,

You are focused on numbers and the definitions that economists use, I am talking about people and what people feel. Both have their place, but lets understand that for most people a continuation of the Great Recession will not be a return to the bad, it will be a return to things getting worse after a pause where we treaded water. I think that most observers miss that one reason a significant portion o the population wants a radical change in the size of government is because they have not seen things get better, and have no faith that things will get better, with out major changes. Taking an axe to government is doing something, it might work, and we have a lot of reasons to want to take at axe to government, it is not just the economics.....the government has become monolithic and invasive, and it has proven more than willing to lie to the citizens and to sell us out to the corporate class. Shrinking government might not be good for us but it sure feels good, it might help, and at this point we dont have much to lose because we know that America is already headed to Hell, at a quickening speed.

First rule of survival...if what you are doing is not working, do something else, anything else.

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@hawkeye10,

There seems to be many people around the globe that agree with at least some of what you say! Wink

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There is no upside to a second Obama term.

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@H2O MAN,

What about the fall of civilization would that not give us a fresh start? Rolling Eyes

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@H2O MAN,

sure there is.

we will get 4 more years of your junior high witticisms...

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@hawkeye10,

How can you know "what people feel?" The reason we have liberals and conservatives is that there are many issues that are not clear cut, and whether you are a liberal or conservative can support issues that by definition belongs in the other camp - by degrees. Nothing is clear cut, and impossible define.

The current crisis was "invented" by the GOP-tea party members of congress. They held the debt ceiling hostage by their demands to cut spending that was already approved in past years.

For those who makes demands to get a routing debt ceiling approval, they begin wrong from the first step, and anything that follows is not reasonable.

Feelings do not matter.

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@cicerone imposter,

Quote:

How can you know "what people feel?

I listen to them.

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@hawkeye10,

Cicerones comment!

Quote:

The reason we have liberals and conservatives is that there are many issues that are not clear cut, and whether you are a liberal or conservative can support issues that by definition belongs in the other camp - by degrees. Nothing is clear cut, and impossible define.

Even though I think that he can be all about himself at times I do think that he has a point! Wink

Quote:

I listen to them.

Just as we all have different degrees of hearing or eye sight I also think that we have different degrees of emotional intelligence!

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Gold has easily broken though $1640.

That is all.

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@hawkeye10,

Gold value continues to increase beyond 60% of US currency circulation. How much of that currency are people willing to give up for gold?

If inflation is the threat, when will owners of gold begin to sell?

If inflation does hit our environment, it only means less people will be spending money - not more. The cost of all goods will increase at a time when wages barely keep up with current inflation. The demand for more gold will diminish, not increase. People will have more difficulty with the possession of cash to live.

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@cicerone imposter,

Obamanomics will bring hyper-inflation to our economy during the inevitable Obamadepression.

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@cicerone imposter,

Quote:

Gold value continues to increase beyond 60% of US currency circulation. How much of that currency are people willing to give up for gold?

If inflation is the threat, when will owners of gold begin to sell?

I think that the demand for gold is not rational, it is not based upon any of the way you are thinking. This is about the loss of faith in the current global economic system, and people reaching for something that will outlive the financial system. Gold is more liquid than is property, the only other good option.

Didn't you get out of gold at $1400?? OOPS!

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@H2O MAN,

H2O MAN wrote:

Obamanomics will bring hyper-inflation to our economy during the inevitable Obamadepression.

Inflation/deflation/outright collapse...we dont know, but we do know that we are now extremely unstable, the risk of very bad things happening is now extremely high. But this is a systemic global problem caused by decades of high risk taking by the government/corporate class, this is not about Obama or partisan politics.

EDIT: this risk taking was caused by chasing growth, which was the only way to keep the system going without fixing it, to keep growing out of problems. This has now failed completely, as the multiple bubbles created and then popped as well as the stratification of wealth and the destruction of the middle class of have all done extensive damage to the social fabric which will in the end bring down the economic system through revolution. The "Arab Spring" was the beginning of the revolt.

1 Reply

Where is the US economy headed?

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