NationStates Jolt Archive

Basic question here. Where do you think this economic downturn is going to head? I can't help to feel that we are all on the Titanic of sorts. The news seems to get worse as the days go by. I also have travelled just recently and realize that the US isn't nearly as screwed as the third world and I dare say parts of Europe. Discuss.....

I expect a modern day great depression. If I'm wrong, then I'll be happy. if I'm right... then I'll be happy that I was right about something! :D

I expect a modern day great depression. If I'm wrong, then I'll be happy. if I'm right... then I'll be happy that I was right about something! :D

I am also starting to lean in this direction. I don't know how much the government can prop up the financial sector. There are limits to everything and even what the US government can do.

The dollar will have to surrender about half its value.

Meh, I'm just glad I ddin't believe all the hype about how house prices were only ever going to go up and how we had "broken the cycle of boom and bust". I thought it was all BS, now I know it's BS.

*shrugs*

Never trust a banker to do anything with your money he hasn't already done with both his own and his son's.

Meh, I'm just glad I ddin't believe all the hype about how house prices were only ever going to go up and how we had "broken the cycle of boom and bust". I thought it was all BS, now I know it's BS.

*shrugs*

Never trust a banker to do anything with your money he hasn't already done with both his own and his son's.

Anyone with a basic knowledge of economics knows that housing prices don't continue to go up indefinitely. It's the gamblers in the banks that really took it to far.

I am also starting to lean in this direction. I don't know how much the government can prop up the financial sector. There are limits to everything and even what the US government can do.

"Government is often not the answer but the problem" Palin/McCain 08

The dollar will have to surrender about half its value.

You can really see how markedly the US dollar has declined when you compare it to oh say...Chilean pesos, or some other currency that it isn't generally indexed against. Here in Canada, we're always measuring our dollar against yours without realising that this isn't taking into account the way the US dollar is falling. So yay, our Canukistani dollar is still close to parity with your Merkin dollar, but I can't buy as many Chilean pesos now as I could a year ago. It's a bit scary just how drastic that change has been.

You can really see how markedly the US dollar has declined when you compare it to oh say...Chilean pesos, or some other currency that it isn't generally indexed against. Here in Canada, we're always measuring our dollar against yours without realising that this isn't taking into account the way the US dollar is falling. So yay, our Canukistani dollar is still close to parity with your Merkin dollar, but I can't buy as many Chilean pesos now as I could a year ago. It's a bit scary just how drastic that change has been.

You make a good point that most people don't realize without travelling.

I expect the US to be hit hard. The closer a country is the worst they will come from. This is the failure of unregulated markets. The short term profit dosnt care about the medium or even long term profit

I expect a modern day great depression. If I'm wrong, then I'll be happy. if I'm right... then I'll be happy that I was right about something! :D

The dollar will have to surrender about half its value.

Umm...

why?

The US will get hit very hard. I don't expect a global 2nd Great Depression though. There's other strong currencies and economies out there.

You make a good point that most people don't realize without travelling.

In a way I think we are deliberately shielded by our media.

If it were more common place to index the dollar (Canadian or US) against the Yen, the Euro, etc, in your regular, average local news, I think people would have a much better sense of how the dollar is actually doing. Every time I point out to someone what I've explained here about Chilean pesos (as an example) they go get it right away, and wonder why they didn't think of it before.

It's because it's not being brought up.

Umm...

why?Because too many foreigners are holding dollar-denominated debt, which they used to regard as a safe store of value, and no longer do. They cannot dump all that paper on the market at once, but are going to scramble to unwind their positions before everybody else does (a "bank run" in slow motion). One analyst put it this way: This is that point in the cartoon when Wiley Coyote has already run off the cliff, but hasn't fallen... oops, now he's looked, and noticed that there's nothing beneath.

Because too many foreigners are holding dollar-denominated debt, which they used to regard as a safe store of value, and no longer do. They cannot dump all that paper on the market at once, but are going to scramble to unwind their positions before everybody else does (a "bank run" in slow motion). One analyst put it this way: This is that point in the cartoon when Wiley Coyote has already run off the cliff, but hasn't fallen... oops, now he's looked, and noticed that there's nothing beneath.

So everything is gonna cost twice as much?

I better be payed twice as much then...

In a way I think we are deliberately shielded by our media.

If it were more common place to index the dollar (Canadian or US) against the Yen, the Euro, etc, in your regular, average local news, I think people would have a much better sense of how the dollar is actually doing. Every time I point out to someone what I've explained here about Chilean pesos (as an example) they go get it right away, and wonder why they didn't think of it before.

It's because it's not being brought up.

You are right they are deliberately trying not to cause widespread panic. If panic sets in like it did in the prior run up to a Depression we are in big trouble. The government can't prop up banks to that extent if panic sets in and everyone starts hoarding cash in their mattresses.

So everything is gonna cost twice as much?

I better be payed twice as much then...

Of course you will......

Umm...

why?

because the question is "Where do you think this economic downturn is going to head?"

if I'm wrong, then I'd be happy to be wrong. if I'm right... well, it's nice to be right at least once right?

The US will get hit very hard. I don't expect a global 2nd Great Depression though. There's other strong currencies and economies out there.

They are all interconnected. One falls the others take a major hit. You think Europe or even China can ride it out without major hits? It could get real ugly.

So everything is gonna cost twice as much?

I better be payed twice as much then...

why would you? are you doing twice as much work now? is the quality of your work going to be double than what it is now?

The US will get hit very hard. I don't expect a global 2nd Great Depression though. There's other strong currencies and economies out there.

the Great Depression was US centric (or the one I'm talking about was US centric) so a second Great Depression would be focused on the USA.

why would you? are you doing twice as much work now? is the quality of your work going to be double than what it is now?

No, that's the robot.

They are meeting right now on Capital Hill talking about "The Mother of All Bail Outs". Over a trillion dollars? I think the Mayans missed the end date by 4 years.

the Great Depression was US centric (or the one I'm talking about was US centric) so a second Great Depression would be focused on the USA.

Then there's a strong chance of a 2nd Great Depression. But now I ask, what'll it be called?

Marrakech II, I completely see your point there.

So, if the US economy goes to shit, the rest of the world's economies would also go to shit, but maybe not as shitty in some areas.

What will the US do next? How will we ride out the depression? How will we recover?

Would we just sit there, or use our military might (while we still have it) to jump start our ailing economy?

Basic question here. Where do you think this economic downturn is going to head? I can't help to feel that we are all on the Titanic of sorts. The news seems to get worse as the days go by. I also have travelled just recently and realize that the US isn't nearly as screwed as the third world and I dare say parts of Europe. Discuss.....

It's going to get worse. We've not really seen the unemployment crunch yet. I'm not surprised - I've been saying this was coming for half a decade.

the Great Depression was US centric (or the one I'm talking about was US centric) so a second Great Depression would be focused on the USA.

No it wasn't. The Great Depression affected the whole world.

It's going to get worse. We've not really seen the unemployment crunch yet. I'm not surprised - I've been saying this was coming for half a decade.

In the circle of friends I run with we have been talking about this for years too. Funny how some of us could see this coming years ago and regulators either couldn't or ignored the signs.


Funny they are saying on CNN right now not to panic. Hmmmm, they said that about 79 years ago too.

No it wasn't. The Great Depression affected the whole world.

Absolutely it did. It may have started US centric but it radiated like a plague.

So, if the US economy goes to shit, the rest of the world's economies would also go to shit, but maybe not as shitty in some areas.

What will the US do next? How will we ride out the depression? How will we recover?

Would we just sit there, or use our military might (while we still have it) to jump start our ailing economy?



Nothing like a good World War to kick start an economy.

So everything is gonna cost twice as much?
Just things that aren't made in the US, oh wait that's just about everything; and gasoline, or anything that has to be moved around by trucks...

I better be payed twice as much then...
That certainly would be better. Doesn't make it likely :p

Nothing like a good World War to kick start an economy.

That's what I'm getting at. Do you (you being anyone) think that is a plausible possibility?

In the circle of friends I run with we have been talking about this for years too. Funny how some of us could see this coming years ago and regulators either couldn't or ignored the signs.


Funny they are saying on CNN right now not to panic. Hmmmm, they said that about 79 years ago too.

The problem isn't that (actual) regulators couldn't see it coming, or ignored it - the problem is that regulators have been demonised and treated as an implicit enemy. The problem is that a credo that has been fairly popular, has said that those who would choose economic security over economic liberty deserved neither... the problem is that no one has wanted to be pointed out as the person saying that Rome was on fire.

That's what I'm getting at. Do you (you being anyone) think that is a plausible possibility?

The stakes are even higher than the other two World Wars though, with nuclear weapons being a well known arm in some countries. No one could be THAT stupid! I hope...

That's what I'm getting at. Do you (you being anyone) think that is a plausible possibility?

At this point everything is on the table. I always maintain that nations are like a family. If it gets extremely bad they will defend and take what they need. I am not saying that will happen but living in a nation with lots of muscle it is possible. Now that is worse case scenario in my opinion.

That's what I'm getting at. Do you (you being anyone) think that is a plausible possibility?

Probably... no, actually. War requires too few warm bodies today, and too much technology. We're going to have to find a different way out.

The problem isn't that (actual) regulators couldn't see it coming, or ignored it - the problem is that regulators have been demonised and treated as an implicit enemy. The problem is that a credo that has been fairly popular, has said that those who would choose economic security over economic liberty deserved neither... the problem is that no one has wanted to be pointed out as the person saying that Rome was on fire.

I see your point. However some throw wood on that fire. Allan Greenspan anyone?

Probably... no, actually. War requires too few warm bodies today, and too much technology. We're going to have to find a different way out.

It doesn't have too.

If no one has the money for new fancy gadgets everyone will to use old stuff- and more warm bodies.

'sides the US already has the most fancy stuff-even if we can't improve it for a while.

It doesn't have too.

If no one has the money for new fancy gadgets everyone will to use old stuff- and more warm bodies.

'sides the US already has the most fancy stuff-even if we can't improve it for a while.

Not to get to far off on a tangent about war.

The US has all the necessary supplies to build as many arms as it wants. We have all the natural resources and industry to do it. Much like we did in WWII. We were self sufficient. Our only issue would be oil. Rationing and a surge in production on the home front and our two neighbors Canada and Mexico would suffice for the short term. Money wouldn't be the main factor in this.

It doesn't have too.

If no one has the money for new fancy gadgets everyone will to use old stuff- and more warm bodies.

'sides the US already has the most fancy stuff-even if we can't improve it for a while.

There's your problem, though...

There's an imbalance of power, and we don't need to ramp up our production to get an edge. Add to that, other nations aren't going to play self-sacrifice just to bail out an economy - we put plenty of hot bodies in Pakistan, and we shouldn't be too surprised if Pakistan busts out nuclear retaliation... or perhaps more worrying, chemical retaliation (since it's a lot cheaper).

The days of war as a surefire kickstart are probably over.

That's what I'm getting at. Do you (you being anyone) think that is a plausible possibility?

Depends on if George III becomes president or not.

I better be payed twice as much then...

Commie.

A pretty nasty recession, probably like 1980-1982. On the upside, the aftermath of that recession was two decades of low inflation, strong growth and the longest and strongest bull market in history.

I guess that's something to keep your spirits up during the long, long road to recovery.

A pretty nasty recession, probably like 1980-1982. On the upside, the aftermath of that recession was two decades of low inflation, strong growth and the longest and strongest bull market in history.

I guess that's something to keep your spirits up during the long, long road to recovery.

Since Michigan has been down and out rather longer (downturn started in 2001) I can only hope we'll either have proportionally better times but continuing on our own bizarre path or for us to get swept back up with the rest of you, praying it'll work.

Since Michigan has been down and out rather longer (downturn started in 2001) I can only hope we'll either have proportionally better times but continuing on our own bizarre path or for us to get swept back up with the rest of you, praying it'll work.

More or less the same here. Thankfully, people need accountants in good and bad economic times so my job prospects are still pretty secure.

More or less the same here. Thankfully, people need accountants in good and bad economic times so my job prospects are still pretty secure.

I'll likely be spending my time whoring myself to various European and American education systems, teaching either English or French as necessary. If things do to really sour I can try to find myself a more comfortable place to stay for a while.

In a way I think we are deliberately shielded by our media.

If it were more common place to index the dollar (Canadian or US) against the Yen, the Euro, etc, in your regular, average local news, I think people would have a much better sense of how the dollar is actually doing.
Central banks most usually look at a trade-weighted index, in which the home currency is measured against a basket made up out of the currencies of the trading partners. That generally gives you a good idea.

All that being said, if you wanted to get Chilean pesos, chances are if you were an actual trader or exporter and needed a decent volume, you'd have to go through USD, Euros or Yen first. There are plenty of Chileans looking for those currencies, fewer looking for Canadian dollars. So the intermediate rates still matter.

As for the OP...I think a lot depends now on this RTC proposal that seems to be floating around Treasury. If that can be gotten off the ground quickly, before too much of the shocks filter through to borrowers in the real economy, it'll probably be a recession, but not a really, really bad one. If the full impact of the freeze in debt markets gets through to the real economy though, it's gonna suck quite a lot. I don't think it'll be a depression, but you can bet it's gonna hurt and it's gonna take a years.

I expect a modern day great depression. If I'm wrong, then I'll be happy. if I'm right... then I'll be happy that I was right about something! :D


Going a little overboard. Unless somebody is braindead enough to make another Smoot-Hawley Tariff Act.

I'll likely be spending my time whoring myself to various European and American education systems, teaching either English or French as necessary. If things do to really sour I can try to find myself a more comfortable place to stay for a while.


I might do that, teach english in another nation as I can't find shit here in this economy.

part of me feels its the media hyping things up - when house prices were rising, for example, they made doom-and-gloom stories about how prices were too high, how first time buyers were forced out of the market, and how it would overheat the economy.
now prices are falling, of course, its yet more doom-and-gloom. the media are always out for a story, and bad news sells.

that said, you can't ignore numerous financial institutions around the world going under or being rescued. you can't ignore unemployment figures rising to their highest level in ten years.

overall, what i feel is that there is a financial crisis, but that it is affecting more areas of the economy than it should due to the media scaring the shit out of everyday people and slowing consumption as a result. that, combined with additional exogenous factors such as rising oil prices and the rising price of food, add up to a pretty shit time. i'm not expecting a depression, but a few years of recession perhaps.


what annoys me though, is when people seem to blame the government for these things. was the credit crunch the government's doing? is the price of oil the government's fault (well, a little, re: Iraq)? is the rising price of food and grain the government's fault? no. these are exogenous issues that do affect our economy, but to blame the government shows a real lack of understanding, imho

Actually Pure Metal gas prices have been dropping for a while now. I believe they are still below $100 a barrel which is down heavy from a few months ago.

And its not just the media, Obama was the first to the scare tactics on this depression BS.

Since Michigan has been down and out rather longer (downturn started in 2001) I can only hope we'll either have proportionally better times but continuing on our own bizarre path or for us to get swept back up with the rest of you, praying it'll work.


I know how you feel. Michigan here too, been jobless for a bit now and I'm not having any luck.

Actually Pure Metal gas prices have been dropping for a while now. I believe they are still below $100 a barrel which is down heavy from a few months ago.

And its not just the media, Obama was the first to the scare tactics on this depression BS.

good point on the oil prices, thanks. i still like to cry wolf on the media though... when their income relies on selling news, and bad news sells, there's a recipe for something fishy. but yeah, politicians do it too. short answer: don't trust anybody ;)

I know how you feel. Michigan here too, been jobless for a bit now and I'm not having any luck.

Yeah, after I came back from studying in France I went and joined the Guard to pay for various student related debts. I'd say about 25% of the guys in the unit are out of work at home and just keep trying to get whatever orders they can from the Guard to stay alive.

I really don't want to leave the state but it looks more and more like I'll have to. If I do I'll likely try to move to Europe, back to France.

A pretty nasty recession, probably like 1980-1982. On the upside, the aftermath of that recession was two decades of low inflation, strong growth and the longest and strongest bull market in history.

I guess that's something to keep your spirits up during the long, long road to recovery.

That would simply mean that we were refusing to learn the same lessons, again.

The idea that the crash is somehow balanced by the boom is part of the problem. Uncontrolled growth isn't an unequivocal good. Pure profit shouldn't necessarily be a goal, much less THE goal.

What 'low inflation' and 'strong growth' meant, was that our currency was devaluing in real terms, and our market was trading on less and less intrinsic value. WHat the 'strongest bull market' meant wsa that we traded way over worth, and what 'longest bull market' meant, was that we managed to put off the crash.

All of which, added together, make for a hell of a 'readjustment'.

ya' know if we started saying only positive things it might catch on and save us from allot of heartache maybe even stopping a recession :tongue:

Everybody now!:
http://www.youtube.com/watch?v=jHPOzQzk9Qo

part of me feels its the media hyping things up - when house prices were rising, for example, they made doom-and-gloom stories about how prices were too high, how first time buyers were forced out of the market, and how it would overheat the economy.
now prices are falling, of course, its yet more doom-and-gloom. the media are always out for a story, and bad news sells.

that said, you can't ignore numerous financial institutions around the world going under or being rescued. you can't ignore unemployment figures rising to their highest level in ten years.

overall, what i feel is that there is a financial crisis, but that it is affecting more areas of the economy than it should due to the media scaring the shit out of everyday people and slowing consumption as a result. that, combined with additional exogenous factors such as rising oil prices and the rising price of food, add up to a pretty shit time. i'm not expecting a depression, but a few years of recession perhaps.


what annoys me though, is when people seem to blame the government for these things. was the credit crunch the government's doing? is the price of oil the government's fault (well, a little, re: Iraq)? is the rising price of food and grain the government's fault? no. these are exogenous issues that do affect our economy, but to blame the government shows a real lack of understanding, imho

Actually you can correlate the price the corn to the increased demand for ethanol, all of which is heavily subsidized by the government.

here is my break down of whats going to happen. If we elect McCain it will continue. If we elect Obama it will continue. The difference is if we elect McCain it will continue with the next guy we elect after him. If we elect Obama the next guy we elect after him will have a clue. making obama like Jimmy Carter.

Then there's a strong chance of a 2nd Great Depression. But now I ask, what'll it be called?
GD II The Dollar Strikes Back

No it wasn't. The Great Depression affected the whole world.TBH, never heard any reference to the Great Depression relating to other countries.

if true (not saying it's not) then the collapse of the American Economy would have a greater effect globally since international ties are stronger now than they were back then.

TBH, never heard any reference to the Great Depression relating to other countries.

if true (not saying it's not) then the collapse of the American Economy would have a greater effect globally since international ties are stronger now than they were back then.

There are actually several articles about it on Wikipedia. Apparently Canada, the Netherlands, and France were hit even worse than the US while the Soviet Union and Germany basically shrugged it off after 1933. I imagine Japan wasn't very affected since they were getting a lot of resources from East Asia and had a more closed economy at the time compared to years prior or later.

Going a little overboard. Unless somebody is braindead enough to make another Smoot-Hawley Tariff Act.

my motto. hope for the best but prepare for the worst.

>.>

<.<

*starts hording canned food*

I expect the US to be hit hard. The closer a country is the worst they will come from. This is the failure of unregulated markets. The short term profit dosnt care about the medium or even long term profitTo pin it solely on unregulated markets is a mistake. There was much more at play than the lack of regulation, not limited to greed, lack of education, and lack of incentive to save.

The US will get hit very hard. I don't expect a global 2nd Great Depression though. There's other strong currencies and economies out there.If the US dragged down the rest of the world in the 1930's, do you really think they will be any better off given how much more tied together we are now? The only thing that has prevented a recession thusfar has been an increase in exports. When that dries up (as it is starting to due to lower available credit), demand for imports will fall. That will hit many other countries and start the spill-over.

part of me feels its the media hyping things up - when house prices were rising, for example, they made doom-and-gloom stories about how prices were too high, how first time buyers were forced out of the market, and how it would overheat the economy.
now prices are falling, of course, its yet more doom-and-gloom. the media are always out for a story, and bad news sells.To be fair, both are true. The rapidly growing housing market did make it harder to buy a house...the only real reason it didn't force people out of the market was thanks to the crappy mortgages. That is a big part of what started the problems...people got bad mortgages to buy overvalued houses. They couldn't pay off their debt, forclosed on the houses, which then flooded the market, lowering housing prices.

that said, you can't ignore numerous financial institutions around the world going under or being rescued. you can't ignore unemployment figures rising to their highest level in ten years.Not to mention, associated companies like AIG

overall, what i feel is that there is a financial crisis, but that it is affecting more areas of the economy than it should due to the media scaring the shit out of everyday people and slowing consumption as a result. that, combined with additional exogenous factors such as rising oil prices and the rising price of food, add up to a pretty shit time. i'm not expecting a depression, but a few years of recession perhaps.It really was a sort of perfect storm, with much of it all interrelated. Gas prices rose (here, at least) due to a declining dollar, tied to the bad loans. Higher gas prices = higher food prices. It's actually been kinda interesting to watch unfold...


what annoys me though, is when people seem to blame the government for these things. was the credit crunch the government's doing? is the price of oil the government's fault (well, a little, re: Iraq)? is the rising price of food and grain the government's fault? no. these are exogenous issues that do affect our economy, but to blame the government shows a real lack of understanding, imhoDefinatly. Governments have done their part to enable this situation...the US passed laws allowing for these banking transactions to occur. That said, Bush's stimulus checks may have actually spared us recession for the moment (even if it did just push it off temporarily, it bought us time to deal with huge problems like Lehman and Bear Sterns without the added issue of a recession in progress). The government deserves some blame, but then, there are plenty of people who deserve blame. And there is plenty of blame to go around. Stupid people with no fiscal responsibility, stupid companies with no fiscal responsibility...there's tons.

I know how you feel. Michigan here too, been jobless for a bit now and I'm not having any luck.
Boston here, wonderfully underemployed.
Actually Pure Metal gas prices have been dropping for a while now. I believe they are still below $100 a barrel which is down heavy from a few months ago. Down from the peak, but still pretty highly elevated.

And its not just the media, Obama was the first to the scare tactics on this depression BS.
He was hardly the first to talk about this in the fashion that he is. He hasn't even used the phrase depression as far as I've seen. Hell, I don't think he's even said "recession". Those phrases are coming from either the media or from those in the field.



As for my view...we're in a pretty precarious position (yay alliteration). The fed has managed to avoid some mistakes (loosening financial policy instead of tightening, as happened in the depression), and the stimulus checks had their intended impact. The collapse of these companies will start to have its spillover, though. Unemployment should start to rise a bit faster now, and companies will start to have some issues raising capital. The companies with the crap mortgages and other junk need to admit the problem, and start to clean it up. The government needs to determine which of these vulnerable companies need to be saved, and which can collapse (AIG can't, Lehman can). If we want to avoid too much of a recession, the government should increase spending on infrastructure...that will provide jobs while giving us some much needed revamps. Life will be a bit harder in the coming years, definatly, but a true depression can be avoided.

The dollar needs to reestablish itself. Credit markets need to shrink to rational levels, and then shore up a bit. The real estate market needs to bottom out. The banks need to look in to what they actually own and which of their portfolios are in trouble (this includes not just the big Wall St. banks, but the commercial banks which have started to buy them up, as well as insurers like AIG). It isn't going to be pretty, though.

There's a question that's been percolating in my silly goofballian brain regarding the governmental plans to bail out these financial institutions for hundreds of billions of dollars. My question is this:

Who is getting the money?

There's a question that's been percolating in my silly goofballian brain regarding the governmental plans to bail out these financial institutions for hundreds of billions of dollars. My question is this:

Who is getting the money?
who cares? We collectively own 80% of the worlds largest insurance company! :)

who cares? We collectively own 80% of the worlds largest insurance company! :)

I'll be waiting patiently to receive my stock certificates in the mail. *nod*

Who is getting the money?

The banks are getting the money. From taxes.

Plz report to homeland security for yr slave collar. They come in a variety of styles and sizes.

Basic question here. Where do you think this economic downturn is going to head? I can't help to feel that we are all on the Titanic of sorts. The news seems to get worse as the days go by. I also have travelled just recently and realize that the US isn't nearly as screwed as the third world and I dare say parts of Europe. Discuss.....

We are looking at something that will make our Grand Parrents feel nostalgic for the 30s.

The banks are getting the money. From taxes.

Taxes? Hell, I bet all this money is going to come from the magical printing presses of the US Treasury. No doubt China will mind greedily lapping up that debt...at this rate, they'll end up owning most of the country. One can only wonder what this next rush of debt will do to further erode any kind of real independence the US has in its international affairs.

And to think people were afraid of the Japanese owning our companies...

people chill out. this is not half as bad as the 70's.

people chill out. this is not half as bad as the 70's.

What is not half as bad?

What we had this week is a precursor. A warning shot across the bows, telling us that something is fundamentally wrong. And you've seen what a shitstorm this little pre-shock caused. Imagine when the real quake hits.

How the inflation will work: The gov't pays out money that is created through borrowing on our future taxes (how doyou like BEING collateral on a loan?) or by creating more money out of nothing (fiat currency is fun!) to whomever they favor. Those guys start spending, which raises prices on goods. The price increase hits LONG before anyone gets a pay raise, and risks exposing the faxt that money isn't worth anything when all that backs it is trust in a corrupt government. If hyperinflation hits, we're all REALLY screwed. Not that the alternative is much better. Inflation 101: the guys who get the new money benefit. Everyone else loses big time.

Buy gold and silver if you can find any! It'll be more secure than paper currency!

How the inflation will work: The gov't pays out money that is created through borrowing on our future taxes (how doyou like BEING collateral on a loan?) or by creating more money out of nothing (fiat currency is fun!) to whomever they favor. Those guys start spending, which raises prices on goods. The price increase hits LONG before anyone gets a pay raise, and risks exposing the faxt that money isn't worth anything when all that backs it is trust in a corrupt government. If hyperinflation hits, we're all REALLY screwed.Not that the alternative is much better.

Buy gold and silver if you can find any! It'll be more secure than paper currency!

Barter economy, ftw.

What is not half as bad?

What we had this week is a precursor. A warning shot across the bows, telling us that something is fundamentally wrong. And you've seen what a shitstorm this little pre-shock caused. Imagine when the real quake hits.

in the 70's the dollar and all europeon currencies dropped about 80% in value.
now the dollar has dropped 40% in value and has even rebounded a little in the last month (well maybe all the other currencies just dropped).

In the 70's Oil climbed in price pretty much until the 80's
the price of oil climb reached its peak and now has fallen almost 50%. (recent gas price increases and shortages in the states from 2 hurricanes taking out refineries.)

you keep pointing saying things will get worse but the normal indicators value of the dollar price of oil seem to point the other way.

We are looking at something that will make our Grand Parrents feel nostalgic for the 30s.
Talk like a pirate day hits everywhere. Even the economy.
in the 70's the dollar and all europeon currencies dropped about 80% in value.
now the dollar has dropped 40% in value and has even rebounded a little in the last month (well maybe all the other currencies just dropped).
This is still very early into whatever issues are to come. A true "recession" has not even hit yet. Patience, young grasshopper.

In the 70's Oil climbed in price pretty much until the 80's
the price of oil climb reached its peak and now has fallen almost 50%. (recent gas price increases and shortages in the states from 2 hurricanes taking out refineries.)Again, for the time being, it has fallen. Oil peaked around $145. Today, it closed at 104.55. How is that a 50% reduction? Lowest it has hit was just about $90. 50% of 145 is 72.5

you keep pointing saying things will get worse but the normal indicators value of the dollar price of oil seem to point the other way.Yet housing prices are falling still, foreclosures are rising, unemployment is rising, and the only thing that has prevented a recession thus far is the fact that our exports have increased thanks to a weak dollar.

in the 70's the dollar and all europeon currencies dropped about 80% in value.
now the dollar has dropped 40% in value and has even rebounded a little in the last month (well maybe all the other currencies just dropped).

In the 70's Oil climbed in price pretty much until the 80's
the price of oil climb reached its peak and now has fallen almost 50%. (recent gas price increases and shortages in the states from 2 hurricanes taking out refineries.)

you keep pointing saying things will get worse but the normal indicators value of the dollar price of oil seem to point the other way.

The fact that some indicators are strong is worrying in and of itself. It means that parts of our economy are entirely artificial. What's holding that up? Debt? Consumer spending is down. House prices are down. The mortgage market is (obviously) shot to shit, right now. And the knock-on from that is that we really should be worried, considering that 'your house' is considered the debt-assurance du jour. Unemployment is up, and still climbing. Debt is up. Bankruptcy - especially at the highest levels.

What this all means is - when you see market strength, it is either predatory and cannibalistic - gold markets are trading okay, but they're buying up something MORE valuable than the currency - which leaves the currency... where? or false. What is holding up Wall Street? Given the ongoing pattern of going bellyup, what is holding Wall Street up... must be largely speculation. The numbers you see as an indicator of strength are markers that our market is largely based on gambling and debt.

I'm keeping my fingers crossed it won't go Black Friday-ish, but the way things look...

Anyway, it's fun to look at old German Billion Mark stamps and bills, some of which were printed before the inflation took hold and simply received a red ink stamp over them to increase their "value" a thousand fold.

Well, I guess that is what happens when one believes in the self-regulating power of the capitalist market with no holds barred instead of some regulations put in place and oversight installed. Who'd have believed that the U.S. government would be nationalizing banks a year ago, eh?

It's just too bad that banks all around the world were to greedy to simply say "Thanks, but no thanks" to the triple-AAA-ed "investment opportunities" that now aren't worth the paper they were printed on.

I'd have loved to see the U.S. try to dig themselves out of that hole all by themselves. Now it looks like everyone's got to grab a shovel. Thanks for nothing!

I think it will get worse. Look forward to double digit unemployment

*makes up a number*

14.8% worse overall.

Basic question here. Where do you think this economic downturn is going to head? I can't help to feel that we are all on the Titanic of sorts. The news seems to get worse as the days go by. I also have travelled just recently and realize that the US isn't nearly as screwed as the third world and I dare say parts of Europe. Discuss.....

I work as a consultant in one of the "big 5". Projects are drying up because of tightened budgets. I have even seen ongoing projects put on hold after some money already sunk. Contracts we were close to winning have been put on hold. The company has laid off a little bench and I expect more to come. I will be ok...but there may be some extra bench time for me between projects.

Well I guess it's time for me to start looking for some civil service work...oh wait I already am, with no luck at it to say the least.

It will collapse at some point this century, about when the oil runs out. Then the factories will stop, the cars will stop moving, and there will be Anarchy. Ok there you go. ;)

I know how you feel. Michigan here too, been jobless for a bit now and I'm not having any luck.

Time to load up the wagon and move west I say. We still have jobs out here. Was just in Michigan a few months back. Plainwell and Kalamazoo to be exact. Didn't seem to much going on in either local.

I work as a consultant in one of the "big 5". Projects are drying up because of tightened budgets. I have even seen ongoing projects put on hold after some money already sunk. Contracts we were close to winning have been put on hold. The company has laid off a little bench and I expect more to come. I will be ok...but there may be some extra bench time for me between projects.

This is where it starts to be honest. It isn't in the blue collar jobs but in white collar industries.

In our insurance business I have cut the advertising to a minimum. I have also stopped subsidizing telemarketers for our sales agents. I told them all that they need to start calling for themselves or foot the bill for the telemarketers on their own. Probably not going to cut any hourly staff but it remains to be seen. Our agents are completely on commission so I don't have to worry about that. Our restaurants are going to be a different story. The higher end restaurant that we own is probably going to be hit harder than the pub. Everyone will still drink beer.

Taxes? Hell, I bet all this money is going to come from the magical printing presses of the US Treasury. No doubt China will mind greedily lapping up that debt...at this rate, they'll end up owning most of the country. One can only wonder what this next rush of debt will do to further erode any kind of real independence the US has in its international affairs.

And to think people were afraid of the Japanese owning our companies...

No. All the actions have been sterilized so far. There has been no printing yet, hence my call for deflation. (Which is happening right now. Pretty much the price of everything is starting to fall now the coms complex has collapsed).

China is very unhappy about all this borrowing though. They are reassessing their position in treasuries, especially since they are now having problems of their own.

U have to remember that on wedenesday it looked like there would be a bank holiday on monday. And CP was totally frozen on wednesday. Teh financial system actually ground to a halt for a bit. Very scary. Worse than the 30s. U have to go back to the panic of 1873 for anything this bad, and back then the financial markets weren't as important b/c a lot of the economy was scrip/barter - at least for day to day things.

The RTC II is an inevitably, because no-one can trust any counterparty owing to the prevalent insolvency. So unsecured lending started to dry up between banks. Hence the enormous LIBOR spike. And completely stopped for others (you would not give money to WaMu overnight, for example). Also repos seized for other than those transactions secured by treasuries or other gov. backed instruments. The problem being, of course, that there was not enough treasuries out there to keep the market liquid. (Hence the collapse in IRX and short duration treasuries as people scrambled for them - man, did I ever make out like a bandit on that - even though hank is busy flooding the market to pay for other schemes).

The hope is that if the government borrows funds and uses those to buy the problem assets it will restore solvency to the system. This of course means that the government is going to have to overpay, because despite what they are telling people, the problem is one of solvency, not liquidity. The government will then transfer the losses to the tax payer. But at least this way, hopefully, normal interbank operations can resume.

The real nightmare was that nothing would have been announced by friday. Rates always go up, and lending becomes more problematic on friday, because of FDIC stuffs, and weekend banking needs. Even good banks can be cash strapped, so the chances were that by monday afternoon credit/debit/atm cards would stop working. EFTs would stop. Things couldn't clear. It would all be a bit argentina.

But there is a pound of flesh coming out of someone's hide.

I would say that in addition to the bailout, the only fair thing would be to asses a reverse tax credit or something on the institutions that take the bailout, which can be worked off over time to at least mitigate the burden on the general tax pool. Also, I would look at the insolvent institutions, and claw back the compensation packages and bonuses that management received after these shops became insolvent. I imagine most of them actually crossed the like somewhere after the dot bombs unwound.

The morally hazardy stuffs has to be addressed, otherwise is won't look like the US is putting its house in order, and that will make it a suspect place to do business. Look how Russia's crony capitalism is doing them in.

I cannot stress enough how serious this situation is. Everybody is basically fucked. I'm not even sure that the RTC plan will work, though it will probably buy another few months at the least. And even though I want to see just desserts meeted out to the likes of Blankfein, Thaine, Fuld et al. I really don't want to have to relocate somewhere better like patagonia, so I sort of hope it works.

This is where it starts to be honest. It isn't in the blue collar jobs but in white collar industries.

In our insurance business I have cut the advertising to a minimum. I have also stopped subsidizing telemarketers for our sales agents. I told them all that they need to start calling for themselves or foot the bill for the telemarketers on their own. Probably not going to cut any hourly staff but it remains to be seen. Our agents are completely on commission so I don't have to worry about that. Our restaurants are going to be a different story. The higher end restaurant that we own is probably going to be hit harder than the pub. Everyone will still drink beer.

I think my biggest concern about how bad this can get is if there is an actually total failure of the banking system. It will wipe out small business and alter the landscape from one of extremely severe deflationary recession (where businesses will progressively fail and see their profits eroded until enough debt is paid or defaulted that the system can start to go forward again) to complete economic crash, i.e. 30% unemployment, social upheaval, bonus marching and all that sort of stuff.

The real nightmare was that nothing would have been announced by friday. Rates always go up, and lending becomes more problematic on friday, because of FDIC stuffs, and weekend banking needs. Even good banks can be cash strapped, so the chances were that by monday afternoon credit/debit/atm cards would stop working. EFTs would stop. Things couldn't clear. It would all be a bit argentina.
Freaky.

Short of something like that happening though, I think people should remember that the crash of '29 didn't turn into a depression just like that. It took the government raising instead of cutting rates, a massive anti-trade law, no deposit insurance scheme to speak of and retail bank failures all across the country to get that bad. People weren't losing their retirement money, they were losing their grocery money. At least the negative impacts of wrong government policies can be avoided this time.

The ones we know about, anyways.

Time to load up the wagon and move west I say. We still have jobs out here. Was just in Michigan a few months back. Plainwell and Kalamazoo to be exact. Didn't seem to much going on in either local.

Most of my friends from high school went east and south, to NYC and the Carolinas.

This drain of our young people is going to cause irreparable damage to Michigan, but if you can't find a job what else can you do?

It's not the apocalypse, hold on to your pants, and buy some whisky. It's delicious. We'll be fine.

Most of my friends from high school went east and south, to NYC and the Carolinas.

This drain of our young people is going to cause irreparable damage to Michigan, but if you can't find a job what else can you do?

I'm all for closing Michigan, and sinking it into its neighboring lakes, in order to create a gigantic body of fesh water.

I'm all for closing Michigan, and sinking it into its neighboring lakes, in order to create a gigantic body of fesh water.

And I'll restate my long held position that Ohio be expelled from the Union, "liberated" and the wearing of sweater vests and the color red be made a capital offense.

And I'll restate my long held position that Ohio be expelled from the Union, "liberated" and the wearing of sweater vests and the color red be made a capital offense.

Aye, I am with you on this one. I live in Washington State and the Ohio fans annoy the hell out of me. I wouldn't expel Ohio. Just get rid of everyone and make it a game reserve. That way we can go and visit without Ohio fans running around acting obnoxious.