[gilency]

Although not very old, I think I may be older than many of you. I have been through recessions before. The first time I was very scared and gloomy. Having survived them, it is obvious the economy goes up and down in cycles. If it goes to high or too low, it eventually corrects itself, or with the help of government of private enterprise actions. America is strong and it will survive again, regardless of internal or external problems. Good leaders and bad leaders come and go; the country keeps on going.

 

[roadtonowhere08]

Quote:

Originally Posted by gilency /img/forum/go_quote.gif Although not very old, I think I may be older than many of you. I have been through recessions before. The first time I was very scared and gloomy. Having survived them, it is obvious the economy goes up and down in cycles. If it goes to high or too low, it eventually corrects itself, or with the help of government of private enterprise actions. America is strong and it will survive again, regardless of internal or external problems. Good leaders and bad leaders come and go; the country keeps on going.

Two things:

1. Our debt is ever growing, and this is not good in the long run. Think how long one can last on charging on credit cards. That is like us on a much larger scale. Someday, something will have to give. Debt is debt for a reason: it HAS to be paid back eventually or you go further in a hole.

2. I could very well be wrong, but people are living on VERY thin margins BY CHOICE these days, moreso than, I believe ever in our history. Our culture of buy now and pay later makes us more vulnerable to the bumps in the road caused by the economy. This is evidenced by the record amount of credit card debt and housing crisis. Nobody has any cushion anymore. Regardless of what people say, this makes the economy more fragile and weak. You cannot spend out of a recession when you are only charging it on a card you cannot pay back. It's a total farce.

America, since we are one of the major catalysts of globalism and heavily invested in by other countries, is like a private company that goes public: we are now at the mercy of the shareholders (ie. China, Middle East, Norway, and South America).

 

[gilency]

in the 1970's the US economy was in terrible shape: high inflation, high oil prices. It recovered. In the 1980's the doom and gloom sayers predicted the end of our economy. Our national debt was staggering. In the 1990's we actually had a surplus at the end of the Clinton presidency. Bush took care of that. I am not dismissing our problems which are many. I am well informed of our current economic situation and it is very troublesome. All I am saying is that I am (somewhat) confident that as in previous crisis, solutions (painful though) will be found.

 

[roadtonowhere08]

Quote:

Originally Posted by gilency /img/forum/go_quote.gif in the 1970's the US economy was in terrible shape: high inflation, high oil prices. It recovered. In the 1980's the doom and gloom sayers predicted the end of our economy. Our national debt was staggering. In the 1990's we actually had a surplus at the end of the Clinton presidency. Bush took care of that. I am not dismissing our problems which are many. I am well informed of our current economic situation and it is very troublesome. All I am saying is that I am (somewhat) confident that as in previous crisis, solutions (painful though) will be found.

There is a difference between the deficit (the Clinton surplus) and out national debt. We are nowhere close to being able to pay that down. Every year, our debt get larger due to our annual deficit. All I am saying is that with every crisis we seem to dodge the bullet by juggling money and economic manipulation. Eventually, all of this will catch up to us, because we will run out of options. I see our country the same way I see a family, when you are in the red, you are in the red, and there is no getting around it no matter how positive or negative a spin the situation is spun.

 

[stevenkelby]

Debt can never be paid off. Debt is where the money came from in the first place. The government borrowed it from the reserve bank with interest. So the $1 that the mint produced would cost more than $1 to pay back.

The only possible way to service that loan is by, you guessed it, more debt.

How can they pay back the debt when it is greater than all the money ever produced?

Personally, you can be fine. But nationally or globally, it can't go on for ever.

 

[Lazarus Short]

Quote:

Originally Posted by stevenkelby /img/forum/go_quote.gif Debt can never be paid off. Debt is where the money came from in the first place. The government borrowed it from the reserve bank with interest. So the $1 that the mint produced would cost more than $1 to pay back. The only possible way to service that loan is by, you guessed it, more debt. How can they pay back the debt when it is greater than all the money ever produced? Personally, you can be fin. But nationally or globally, it can't go on for ever.

Now, that goes to the heart of the matter [as does your new avatar]. Way back before anyone now living, America had both debt-free money and real prosperity. A connection? Oh, yes...

Laz

 

[stevenkelby]

Quote:

Originally Posted by Lazarus Short /img/forum/go_quote.gif Now, that goes to the heart of the matter [as does your new avatar]. Way back before anyone now living, America had both debt-free money and real prosperity. A connection? Oh, yes... Laz

Thanks but don't read too much into the Av, it's a serious engineering query, I'm undecided on the rest of the "issue". If the truth comes out in 10 years I won't be laughing and saying 'told you so. Depressing enough as it is.

A couple of my posts in this thread have been deleted , I guess for their "political" content. No-one wants to hear the horrible truth of how the economy, or anything, truly works.

I would just ask people to do some research for themselves with an open mind and don't believe anything that doesn't make sense to you. Ask tough questions and search for satisfactory answers to them.

Really though, we'll be fine, whatever happens. Humans are resilient and eternally optimistic.

 

[hoosterw]

Some real good things said, we (the world) are in for a lesser period and true, we will survive.
But I think it will mean a re-shuffle of some good old principles.

US used to be the 'consumption engine' that powered the world economics. With that the dollar was a world dominating currency, hence also all the dollar based pricings and dollar based values.

US could base their whole debt and ecomony structure on the dollar. Contrary to most other countries that have to rely also on foreign currency for their national debt. A dollar was dollar and you knew what you could buy for that.

Now that is in for a big change!

New consumption engines (yes multiple) are coming up, China, India, Russia and furrely enough these have also become the main production area's.
And with that the dollar will loose ground as world dominating currency.

It will not happen overnight but in the next 5 to 10 years it will be changed.

US will have to get used that what you can buy for a dollar is not always the same and is depending on other currencies as well.

In that respect Europe is one step ahead of US an advantage that will pay off in the years to come. We already are used to multiple foreign currency influences in our daily lives. Europe has by long outsourced main production to those area's and have reshuffeld our internal economics to fit that.
Europe will for sure not become a world dominating country nor currency but I just feel we are more ready for the changes to come.

I must say one thing for the persons that created the monetary European union and the Euro, they saw this coming and knew that the only way Europe could stand a change of survival between all those great powers, was to unite. (I state survival and not winning!!). It is not nice having to integrate all those poor and bad run countries here in the EU but we have to if we are to stand a change of survival. Each by our own we are lost in the great flow of world economics.

Just my own opinion!!

Hans.

 

[nfusion770]

I've seen a poll a few times now- something like 70-80% of people claim to be doing fine themselves, while roughly the same percentage are worried about everyone else. Seems like the difference between todays recession and previous recessions is, at least to some degree, a need for the press to have a crisis to cover and it seems, as usual, to have a great deal of influence on public opinion.

Not to say that there problems, but when the recession debate has been in question until the last week or so, depression seems to jump the gun by a long shot. Actually, the job loss numbers from previous recessions were far greater than they are now, one of the indicators that this may be shallow recession. Also, recessions usually last 10 months, the last few have lasted only 8 months. If the recession began in November (as many believe) we are already half way out of it.

I am by no means an expert, but I have seen enough doom and gloom, and over reaction in my day to discount a great deal of it. Some of this stuff seems scary, but recessions are just a normal part of the business cycle. I do wish, however, something could be done to eliminate the gaps that enable massive corporate scandals every decade or so.

 

[stevenkelby]

Quote:

Originally Posted by blessingx /img/forum/go_quote.gif I learned a great deal on the sub-prime mortgage crisis from this short Fresh Air episode. Worth a listen.

Forgot to say thanks for this link, every one should listen to it. Lots of other great pieces there too.

 

[sejarzo]

Quote:

Originally Posted by roadtonowhere08 /img/forum/go_quote.gif .....America, since we are one of the major catalysts of globalism and heavily invested in by other countries, is like a private company that goes public: we are now at the mercy of the shareholders (ie. China, Middle East, Norway, and South America).

It's not only that those other countries how hold so much of our debt.

What bothers me greatly about the trade surplus is that the folks in the EU and China are not using those dollars we send over to buy US-made goods in return......instead, they are buying US companies!

Firms I've worked for in the US chemical industry over the past 30 years include Stauffer Chemical (now largely owned by Rhodia, spinoff of Rhone Poulenc, plus INEOS, a British conglomerate), Morton Chemical (its most profitable unit eventually spun off to Nippon Paint), Miles Labs (remnants of which are owned by Bayer AG and other Bayer spinoffs), and General Mills Chemicals (bought by Henkel, now Cognis).

A local plant owned by Pfizer until the mid-1980's is now owned by a Hong Kong investment group.

GE Plastics, who developed polycarbonate (the polymer used in CD's) was recently sold to SABIC, 70% of which is owned by the Saudi government.

Some remaining jobs stay here, at least....but the profits won't. And with a weakening dollar, there will not be meaningful reinvestment here. The excuse will be that sure, capital in the US is relatively cheap compared to the EU, but the profits don't translate so well into euros any more. And in general, their "solution" has been further headcount reductions, or in the case of Bayer, engaging in price-fixing cartels that ruined several businesses.

 

[stevenkelby]

Mr. Burns: "Don't worry, your jobs are safe! They'll just be done by someone else in another country."

No laughing matter.

Australia don't make anything anymore either, we sell all the raw materials to China cheaply then buy back the finished goods expensively.

I don't know how much of a bad thing that is, or what can be done about.

 

[AlanY]

Quote:

Originally Posted by stevenkelby /img/forum/go_quote.gif Australia don't make anything anymore either, we sell all the raw materials to China cheaply then buy back the finished goods expensively. I don't know how much of a bad thing that is, or what can be done about.

It's not a problem. Natural resources / commodity production is a relatively sustainable comparative advantages. (In fact, relative to other countries that don't have equivalent raw materials, it's what economists call an absolute advantage.) That doesn't mean it doesn't go through boom/bust cycles... commodities do, but over the long term it's a more solid position to be in than a largely services based economy like the US is becoming, unless one makes some rather unrealistic assumptions about future productivity growth.

 

[stevenkelby]

Well that's good news!

BTW, have you really made 1200 posts and only own an HF-1? What do you plug it into?

 

[Roam]

When even the likes of Alan "Bubbles" Greenspan say that we're in the worst credit crisis in 50 years, it more or less means "crisis which may rival the Great Depression" when translated from Fed speak.

Bloomberg article
Excerpt:
Quote:

Former Federal Reserve Chairman Alan Greenspan said the current credit crisis is the worst in at least 50 years. ``The current credit crisis is the most wrenching in the last half century and possibly more,'' Greenspan told a conference in Tokyo today via satellite from Washington. Greenspan's remarks echo the assessments of economists including those at the International Monetary Fund, and may add to pressure on policy makers to strengthen their response to the credit crunch. Federal Reserve officials last week acknowledged that capital markets remain distressed even after the fastest interest-rate cuts in two decades. Greenspan, 82, said the extent of damage stemming from the collapse of the subprime-mortgage market won't be known for months. ``Have we reached a point where prices are stable? We cannot know that for a couple of months,'' he said. He added that prices may begin to stabilize by the start of 2009 as home inventories decline.