I'm starting to doubt $700 billion is enough to save the US economy

[Sgt_Strider]

http://www.bloomberg.com/apps/news?pid=20601087&sid=aoAIRJWrcnO4&refer=home

So the US govt has to step in again to save Citigroup even though they've got a cash infusion from the US govt earlier in the year. While the $700 billion was billed as a solution to save the US Financial sector, it seems like the money may be used to save other sectors of the ailing economy such as the auto sector. I have the feel that $700 billion may not even be enough. It's probably going to take another $700 billion to save the economy as so many companies are in the red and have significant importance to the US economy.

[phomp]

Many have said that 700 billion will not be enough, right when this plan was announced.. Hell, even I made some posts agreeing that 700 billion will not be enough and a good guess would probably be in the 3-4 Trillion dollar range.

[abu_sme]

Well, that money afaik is coming from the 700 billion fund, but it isn't going to be long before it is depleted at this rate regardless.

[Peckerwood]

I am starting to doubt that any of this "crisis" was an accident

[UncleSteve]

I am starting to doubt that any of this "crisis" was an accident

Gary Bell, aka "The Spaceman" on AM640 in Toronto is way ahead of you on that one. Of course, if he stubs his toe in the bathtub, he still blames the Illuminati. :)

[Peckerwood]

Gary Bell, aka "The Spaceman" on AM640 in Toronto is way ahead of you on that one. Of course, if he stubs his toe in the bathtub, he still blames the Illuminati. :)
Well the great depression was engineered by the same people that backed Hitler's rise to power. Repeated recessions in this case are being used to consolidate wealth into the hands of the few by transferring the costs to the taxpayers by means of a cooperating government.

Sickening to see government being towed along by the coattails of the banks and the rich. None of these people actually need to be bailed out...fear is being used to increase a new form of hidden yet open taxation scheme...called "recession".

[flexwong]

I am starting to doubt that any of this "crisis" was an accident

it was never an accident. warren buffet called it poetic justice. it's the fault of the big banks in the US and how greedy their executives were.

[bionicbadger]

it was never an accident. warren buffet called it poetic justice. it's the fault of the big banks in the US and how greedy their executives were.
Partly the fault of banks and partly the fault of stupid people who borrow more than they could ever pay back. Also partly the fault of the real estate industry for fooling people into thinking that their house prices would continue to go up

[65505201]

You were a fool if you thought a bailout was the right strategy or that $700B would've been enough.

[Igor01]

U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit (http://www.bloomberg.com/apps/news?pid=20601109&sid=an3k2rZMNgDw&refer=home)

I'm afraid that this time next year they'll be throwing tens of trillions around and it will seem like chum change. May I also note that they don't really have this money and have to either borrow or print it.

[urameatball]

$700B surely wouldn't bring economic prosperity, but it does it's job in helping prevent another great depression.

[Sgt_Strider]

U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit (http://www.bloomberg.com/apps/news?pid=20601109&sid=an3k2rZMNgDw&refer=home)

I'm afraid that this time next year they'll be throwing tens of trillions around and it will seem like chum change. May I also note that they don't really have this money and have to either borrow or print it.

It'll probably be a combination of both, but the US government is more likely going to borrow. Printing more money will just contribute more to inflation and hurt the value of the dollar.

[Sgt_Strider]

Well the great depression was engineered by the same people that backed Hitler's rise to power. Repeated recessions in this case are being used to consolidate wealth into the hands of the few by transferring the costs to the taxpayers by means of a cooperating government.

Don't you think that is a stretch there?


Sickening to see government being towed along by the coattails of the banks and the rich. None of these people actually need to be bailed out...fear is being used to increase a new form of hidden yet open taxation scheme...called "recession".

I think this is one of those situations where the gov is damned if they do and they're damned if they don't.

[netriones]

All it takes to fix economy is time, more or less.

[Dog5]

Don't you think that is a stretch there?


Well, it's certainly possible instead that everyone in the political and financial sector and in the media are charlatans and are economically illiterate.

That alternative doesn't seem particularly comforting to me either.

[sexpuppet6000]

Does anyone know why they choose 700 billion? Why not 800 or why not a solid trill?

[AllWheelDrift]

Does anyone know why they choose 700 billion? Why not 800 or why not a solid trill?
1 trillion would be much harder to shove down the public's throat?

[Sgt_Strider]

Does anyone know why they choose 700 billion? Why not 800 or why not a solid trill?

You should ask Henry Paulson.

[Thalo]

all it takes to fix economy is time, more or less.

+1

[airblade90]

Trade is simple for the next 5 years..., short USD, long gold.... The US government is creating money from nothing. And its not 700 billion, that was a scam for PR purposes. Try 3 Trillion already tapped so far and a "cap" of over 7 trillion....

[movieman]

It'll probably be a combination of both, but the US government is more likely going to borrow. Printing more money will just contribute more to inflation and hurt the value of the dollar.

Borrowing money to bail out failing companies will lead to more companies failing, as savers lend money to the US government rather than to companies in order to reduce the risk of losing it. This is just another reason why bailouts are a really bad idea.

Sooner or later the US government has to start printing money and throwing it out of helicopters if they want to inflate away the debts; they can't just borrow, because that reduces the availability of credit to the rest of the economy. Of course most other Western governments will have to do the same, so that doesn't mean that the US dollar will reach toilet paper status faster than everyone else.

[Thalo]

Borrowing money to bail out failing companies will lead to more companies failing, as savers lend money to the US government rather than to companies in order to reduce the risk of losing it. This is just another reason why bailouts are a really bad idea.

Sooner or later the US government has to start printing money and throwing it out of helicopters if they want to inflate away the debts; they can't just borrow, because that reduces the availability of credit to the rest of the economy. Of course most other Western governments will have to do the same, so that doesn't mean that the US dollar will reach toilet paper status faster than everyone else.

You're right, the problem right now is that everyone is lending their money to the US gov because they're too afraid of risk. Eventually things turn around though, and people realize that they get nowhere holding t-bills at 0.05% and start buying corporate debt again.

U.S. still has a lot of borrowing room and in this risk averse economy it's easy and very cheap. What they do then is take advantage of this money and in turn lend the money to the corporations. It's kind of like a guy with an 800 FICO score borrowing money off his Prime interest rate HELOC to lend to his deadbeat friend who otherwise would be paying the bank 20%.

Looking closer to home, the gov of Canada lowered the rates on CSBs from 2% to 1.85%. People are buying this sh**!

[najibs]

What the US economy needs besides Obama is..........ONE TRILLION DOLLARS!

http://blog.lib.umn.edu/maasx003/Vikings/images/billion_dollars-720856.jpg

[Sgt_Strider]

Borrowing money to bail out failing companies will lead to more companies failing, as savers lend money to the US government rather than to companies in order to reduce the risk of losing it. This is just another reason why bailouts are a really bad idea.

Regardless of whether a bailout make sense or not, the decision has been made. I think the last thing the US govt wants to see is an increase in inflation.


Sooner or later the US government has to start printing money and throwing it out of helicopters if they want to inflate away the debts; they can't just borrow, because that reduces the availability of credit to the rest of the economy. Of course most other Western governments will have to do the same, so that doesn't mean that the US dollar will reach toilet paper status faster than everyone else.

I still think the US will get most of the money if not all by borrowing from other countries. Both the Chinese and Japanese governments have large reserves of US dollars and investments in the US. The last thing they want is a devaluation of their investments. I think these two countries will continue to prop up the US economy by lending more money. It's in their interest to do so.

[Newbieinvestor]

Today:


Bush warned there could be more bailouts to come...

Bush is not a true conservative. He spends government money like a drunken sailor, or at least a drunken national guard pilot on the lam.

[Sgt_Strider]

Today:



Bush is not a true conservative. He spends government money like a drunken sailor, or at least a drunken national guard pilot on the lam.

I have to agree with you on this. GWB likes to talk about principle and he has said he was a conservative, but his actions over the past 8 years suggest he is anything but a fiscal conservative. In fact, I think he's about as crazy as Mulroney was when it came to spending. It's no wonder that many people wonder what the future will be. I think at some point in the near future, the US govt will need to start raising taxes to tackle the ever growing debt.

[ckhw]

Well the great depression was engineered by the same people that backed Hitler's rise to power. Repeated recessions in this case are being used to consolidate wealth into the hands of the few by transferring the costs to the taxpayers by means of a cooperating government.

Sickening to see government being towed along by the coattails of the banks and the rich. None of these people actually need to be bailed out...fear is being used to increase a new form of hidden yet open taxation scheme...called "recession".

I couldn't agree more with every single word you said. Now, any suggestion how I can a small portion of that 700 billion?

[Newbieinvestor]

I couldn't agree more with every single word you said. Now, any suggestion how I can a small portion of that 700 billion?

Did you send money to Bush's 04 reelection campaign?

Did you sell him some smack in the 70's?

You plan on helping Jeb in 2012?

[Sgt_Strider]

So I just watched CBC News and there are now rumours that when Obama becomes president, he might push forward a stimulus package worth $700 billion.It seems like both the Democrats and Republicans have problems controlling spending.

[mymeowcat]

Watch these people ridicule Petere Schiff:

http://www.youtube.com/watch?v=_HFNJw7xGSA&feature=related

Interview with tthe former Comptroller General of the US

http://www.youtube.com/watch?v=msPb565gLso&feature=related

Two trilliion already gone?:

http://www.youtube.com/watch?v=FTQFbKzotcs&feature=related

:evil:

[Thalo]

So I just watched CBC News and there are now rumours that when Obama becomes president, he might push forward a stimulus package worth $700 billion.It seems like both the Democrats and Republicans have problems controlling spending.

Difference is that the Republican President ran huge deficits during strong economic years by financing a costly war that isn't going anywhere. The Democratic President has no choice but to run even huger deficits to get them out of the mess they presently find themselves in.

I'm not a liberal, nor an Obama supporter, but I admit Bush is a complete f***-up of a President and a lot of the people stateside who call themselves "conservative" are more social conservatives than fiscal conservatives.

[Sgt_Strider]

Difference is that the Republican President ran huge deficits during strong economic years by financing a costly war that isn't going anywhere. The Democratic President has no choice but to run even huger deficits to get them out of the mess they presently find themselves in.

Don't forget that Obama have other plans he intend to enact such as universal free health care. He has a lot of programs that he wants to implement. It won't be free. So therefore the notion that he's just running a larger deficit to save the US is just not true.


I'm not a liberal, nor an Obama supporter, but I admit Bush is a complete f***-up of a President and a lot of the people stateside who call themselves "conservative" are more social conservatives than fiscal conservatives.

If anything, the last 8 years have shown Bush not just a social conservative, but a hardliner on the world stage.

[mymeowcat]

China just announced an eye popping 1.4 trillion stimulus package to improve infrastructure. Double the US --- they own a large part of the US debt.

I don't see how Obama can do anything.

Nikkei is up over 5% as of 1:00AM MST but in the medium run --- I don't see how the USA can recover??? Obama can make any stimulus package he wants but ultimately how will it be paid for without anything like printing money (causing hyperinflation).

This thing is going to tumble:cry:

[Sgt_Strider]

China just announced an eye popping 1.4 trillion stimulus package to improve infrastructure. Double the US --- they own a large part of the US debt.

I don't see how Obama can do anything.

Nikkei is up over 5% as of 1:00AM MST but in the medium run --- I don't see how the USA can recover??? Obama can make any stimulus package he wants but ultimately how will it be paid for without anything like printing money (causing hyperinflation).

This thing is going to tumble:cry:

You misinterpreted the information that was released by the media. The $1.4 trillion figure that you gave is just a total of Chinese provincial spending to stimulate their economies. The central government in Beijing announced a stimulus package $586 billion couple of weeks ago.

[at1212b]

Its not gong to save it, but its like giving morphine for a huge injury. Just makes it more bearable now.

Now the problem is, if these expenditures keep outpacing tax revenues, for the next couple of years (as it looks like with Obama who's doing his best FDR impersonation on spending on infrastructure and public works), and if the US keeps printing more money or tries to borrow, there could be a huge mess when that happens (they can't raise taxes, borrow more, and printing more will cause massive inflation further loss of confidence).

[mikeycanuk]

I read this back in March and I should have put my RRSP in cash. sigh :(

The Coming Financial Pandemic

By Nouriel Roubini
http://www.foreignpolicy.com

March/April 2008
The U.S. financial crisis cannot be contained. Indeed, it has already begun to infect other countries, and it will travel further before it’s done. From sluggish trade to credit crunches, from housing busts to volatile stock markets, this is how the contagion will spread.



Illustrations by Brian Hubble for FP
Web Extra: For a look at the winners and losers in a possible global recession, visit: ForeignPolicy.com/extras/recession

For months, economists have debated whether the United States is headed toward a recession. Today, there is no doubt. President George W. Bush can tout his $150 billion economic stimulus package, and the Federal Reserve can continue to cut short-term interest rates in an effort to goose consumer spending. But those moves are unlikely to stop the economy’s slide. The severe liquidity and credit crunch from the subprime mortgage bust is now spreading to broader credit markets, $100 barrels of oil are squeezing consumers, and unemployment continues to climb. And with the housing market melting down, empty-pocketed Americans can no longer use their homes as ATMs to fund their shopping sprees. It’s time to face the truth—the U.S. economy is no longer merely battling a touch of the flu; it’s now in the early stages of a painful and persistent bout of pneumonia.

Meanwhile, other countries are watching anxiously, hoping they don’t get sick, too. In recent years, the global economy has been unbalanced, with Americans spending more than they earn and the country running massive external deficits. When the subprime mortgage crisis first hit headlines last year, observers hoped that the rest of the world had enough growth momentum and domestic demand to gird itself from the U.S. slowdown. But making up for slowing U.S. demand will be difficult, if not impossible. American consumers spend about $9 trillion a year. Compare that to Chinese consumers, who spend roughly $1 trillion a year, or Indian consumers, who spend only about $600 billion. Even in wealthy European and Japanese households, low income growth and insecurities about the global economy have caused consumers to save rather than spend. Meanwhile, countries such as China rely on exports to sustain their high economic growth. So there’s little reason to believe that global buyers will pick up the slack of today’s faltering American consumer, whose spending has already begun to drop.

Because the United States is such a huge part of the global economy—it accounts for about 25 percent of the world’s GDP, and an even larger percentage of international financial transactions—there’s real reason to worry that an American financial virus could mark the beginning of a global economic contagion. It may not devolve into a worldwide recession, but at the very least, other nations should expect sharp economic downturns, too. Here’s how it will happen:

TRADE WILL DROP: The most obvious way that a U.S. recession could spill over elsewhere in the world is through trade. If output and demand in the United States fall—something that by definition would happen in a recession—the resulting decline in private consumption, capital spending by companies, and production would lead to a drop in imports of consumer goods, capital goods, commodities, and other raw materials from abroad. U.S. imports are other countries’ exports, as well as an important part of their overall demand. So such a scenario would spell a drop in their economic growth rates, too. Several significant economies—including Canada, China, Japan, Mexico, South Korea, and much of Southeast Asia—are heavily dependent on exports to the United States. China, in particular, is at risk because so much of its double-digit annual growth has relied on the uptick of exports to the United States. Americans are the world’s biggest consumers, and China is one of the world’s largest exporters. But with Americans reluctant to buy, where would Chinese goods go?

China is also a good example of how indirect trade links would suffer in an American recession. It once was the case that Asian manufacturing hubs such as South Korea and Taiwan produced finished goods, like consumer electronics, that were exported directly to American retailers. But with the rise of Chinese competitiveness in manufacturing, the pattern of trade in Asia has changed: Asian countries increasingly produce components, such as computer chips, for export to China. China then takes these component parts and assembles them into finished goods—say, a personal computer—and exports them to American consumers. Therefore, if U.S. imports fall, then Chinese exports to the United States would fall. If Chinese exports fall, then Chinese demand for component parts from the rest of Asia would fall, spreading the economic headache further.

A WEAK DOLLAR WILL MAKE MATTERS WORSE: Already, the economic slowdown in the United States and the Fed’s interest rate cuts have caused the value of the dollar to drop relative to many floating currencies such as the euro, the yen, and the won. This weaker dollar may stimulate U.S. export competitiveness, because those countries will be able to buy more for less. But, once again, it is bad news for other countries, such as Germany, Japan, and South Korea, who rely heavily on their own exports to the United States. That’s because the strengthening of their currencies will increase the price of their goods in American stores, making their exports less competitive.

HOUSING BUBBLES WILL BURST WORLDWIDE: The United States isn’t the only country that experienced a housing boom in recent years. Easy money and low, long-term interest rates were plentiful in other countries, too, particularly in Europe. The United States also isn’t the only country that has experienced a housing bust: Britain, Ireland, and Spain lag only slightly behind the United States as the value of their flats and villas trends downward. Countries with smaller but still substantial real estate bubbles include France, Greece, Hungary, Italy, Portugal, Turkey, and the Baltic nations. In Asia, countries including Australia, China, New Zealand, and Singapore have also experienced modest housing bubbles. There’s even been a housing boom in parts of India. Inevitably, such bubbles will burst, as a credit crunch and higher interest rates poke holes in them, leading to a domestic economic slowdown for some and outright recession for others.

COMMODITY PRICES WILL FALL: One need only look at the skyrocketing price of oil to see that worldwide demand for commodities has surged in recent years. But those high prices won’t last for long. That’s because a slowdown of the U.S. and Chinese economies—the two locomotives of global growth—will cause a sharp drop in the demand for commodities such as oil, energy, food, and minerals. The ensuing fall in the prices of those commodities will hurt the exports and growth rate of commodity exporters in Asia, Latin America, and Africa. Take Chile, for example, the world’s biggest producer of copper, which is widely used for computer chips and electrical wiring. As demand from the United States and China falls, the price of copper, and therefore Chile’s exports of it, will also start to slide.

FINANCIAL CONFIDENCE WILL FALTER: The fallout from the U.S. subprime meltdown has already festered into a broader and more severe liquidity and credit crunch on Wall Street. That, in turn, has spilled over to financial markets in other parts of the world. This financial contagion is impossible to contain. A huge portion of the risky, radioactive U.S. securities that have now collapsed—such as the now disgraced residential mortgage-backed securities and collateralized debt obligations—were sold to foreign investors. That’s why financial losses from defaulting mortgages in American cities such as Cleveland, Las Vegas, and Phoenix are now showing up in Australia and Europe, even in small villages in Norway.

Consumer confidence outside the United States—especially in Europe and Japan—was never strong; it can only become weaker as an onslaught of lousy economic news in the United States dampens the spirits of consumers worldwide. And as losses on their U.S. operations hit their books, large multinational firms may decide to cut back new spending on factories and machines not just in the United States but everywhere. European corporations will be hit especially hard, as they depend on bank lending more than American firms do. The emerging global credit crunch will limit their ability to produce, hire, and invest.

The best way to see how this financial flu spreads is by watching global stock markets. Investors become more risk averse when their economies appear to be slowing down. So whenever there’s bad economic news in the United States—say, reports of higher unemployment or negative GDP growth—there are worries that other economies will suffer, too. Investors sell off their stocks in New York and the Dow Jones plunges. You can expect a similarly sharp fall when the Nikkei opens in Tokyo a few hours later, and the ripple effect then continues in Europe when opening bells ring in Frankfurt, London, and Paris. It’s a vicious circle; the market volatility culminates in a kind of panicky groupthink, causing investors to dump risky assets from their portfolios en masse. Such financial contagion was on prime display when global equity markets plummeted in January.

-->

[mikeycanuk]

--->
MONEY FOR NOTHING

Optimists may believe that central banks can save the world from the painful side effects of an American recession. They may point to the world’s recovery from the 2001 recession as a reason for hope. Back then, the U.S. Federal Reserve slashed interest rates from 6.5 percent to 1 percent, the European Central Bank dropped its rate from 4 percent to 2 percent, and the Bank of Japan cut its rate down to zero. But today, the ability of central banks to use monetary tools to stimulate their economies and dampen the effect of a global slowdown is far more limited than in the past. Central banks don’t have as free a hand; they are constrained by higher levels of inflation. The Fed is cutting interest rates once again, but it must worry how the disorderly fall of the dollar could cause foreign investors to pull back on their financing of massive U.S. debts. A weaker dollar is a zero-sum game in the global economy; it may benefit the United States, but it hurts the competitiveness and growth of America’s trading partners.

Monetary policy will also be less effective this time around because there is an oversupply of housing, automobiles, and other consumer goods. Demand for these goods is less sensitive to changes in interest rates, because it takes years to work out such gluts. A simple tax rebate can hardly be expected to change this fact, especially when credit card debt is mounting and mortgages and auto loans are coming due.

The United States is facing a financial crisis that goes far beyond the subprime problem into areas of economic life that the Fed simply can’t reach. The problems the U.S. economy faces are no longer just about not having enough cash on hand; they’re about insolvency, and monetary policy is ill equipped to deal with such problems. Millions of households are on the verge of defaulting on their mortgages. Not only have more than 100 subprime lenders gone bankrupt, there are riding delinquencies on more run-of-the-mill mortgages, too. Financial distress has even spread to the kinds of loans that finance excessively risky leveraged buyouts and commercial real estate. When the economy falls further, corporate default rates will sharply rise, leading to greater losses. There is also a “shadow banking system,” made up of non-bank financial institutions that borrow cash or liquid investments in the near term, but lend or invest in the long term in nonliquid forms. Take money market funds, for example, which can be withdrawn overnight, or hedge funds, some of which can be redeemed with just one month’s notice. Many of these funds are invested and locked into risky, long-term securities. This shadow banking system is therefore subject to greater risk because, unlike banks, they don’t have access to the Fed’s support as the lender of last resort, cutting them off from the help monetary policy can provide.

Beyond Wall Street, there is also much less room today for fiscal policy stimulus, because the United States, Europe, and Japan all have structural deficits. During the last recession, the United States underwent a nearly 6 percent change in fiscal policy, from a very large surplus of about 2.5 percent of GDP in 2000 to a large deficit of about 3.2 percent of GDP in 2004. But this time, the United States is already running a large structural deficit, and the room for fiscal stimulus is only 1 percent of GDP, as recently agreed upon in President Bush’s stimulus package. The situation is similar for Europe and Japan.

President Bush’s fiscal stimulus package is too small to make a major difference today, and what the Fed is doing now is too little, too late. It will take years to resolve the problems that led to this crisis. Poor regulation of mortgages, a lack of transparency about complex financial products, misguided incentive schemes in the compensation of bankers, wrongheaded credit ratings, poor risk management by financial institutions—the list goes on and on.

Ultimately, in today’s flat world, interdependence boosts growth across countries in good times. Unfortunately, these trade and financial links also mean that an economic slowdown in one place can drag down everyone else. Not every country will follow the United States into an outright recession, but no one can claim to be immune.

[Thalo]

Is everybody who's of the opinion that "this thing is going to tumble" at least aware of how economic cycles work? The symptoms of a recession are the solution and with or without government aid the economy will eventually resusicate itself. Government aid just smooths things out; it doesn't shorten the recession, but it makes for a shallower trough.

Anybody who thinks this is the end of free enterprise, capital markets or the economic dominance of the United States is talking out of their ass. If anything, the U.S. will recover before any other countries, where protectionism and socialism ****** growth.

[at1212b]

Is everybody who's of the opinion that "this thing is going to tumble" at least aware of how economic cycles work? The symptoms of a recession are the solution and with or without government aid the economy will eventually resusicate itself. Government aid just smooths things out; it doesn't shorten the recession, but it makes for a shallower trough.

Anybody who thinks this is the end of free enterprise, capital markets or the economic dominance of the United States is talking out of their ass. If anything, the U.S. will recover before any other countries, where protectionism and socialism ****** growth.

You don't call this huge redistribution of wealth to bail out companies a form of 'Socialism'?

Normally, I would agree with that statement, but in this case, with all the spending, they are acting like a Socialist society.

[One-Eye Samu-Rai]

Don't know much about economics...but wondering what your opinion of Ron Paul's ideas? Would his solutions make sense?

Less government mingling (federal level)
Rid of Federal Reserve
Rid of IRS


Is everybody who's of the opinion that "this thing is going to tumble" at least aware of how economic cycles work? The symptoms of a recession are the solution and with or without government aid the economy will eventually resusicate itself. Government aid just smooths things out; it doesn't shorten the recession, but it makes for a shallower trough.

Anybody who thinks this is the end of free enterprise, capital markets or the economic dominance of the United States is talking out of their ass. If anything, the U.S. will recover before any other countries, where protectionism and socialism ****** growth.

[Sgt_Strider]

Don't know much about economics...but wondering what your opinion of Ron Paul's ideas? Would his solutions make sense?

Less government mingling (federal level)
Rid of Federal Reserve
Rid of IRS

Less government intervention would probably make things worse for the average Joe. I think people have learned a lot from the mistakes that were made during the Great Depression. There was little to no govt intervention during the early 1930s which was why it made the Depression so painful for people. I think at the end of the day, Ron Paul is just an idealist who's ideas are not compatible with a 21st century economy.

[Newbieinvestor]

Less government intervention would probably make things worse for the average Joe. I think people have learned a lot from the mistakes that were made during the Great Depression. There was little to no govt intervention during the early 1930s which was why it made the Depression so painful for people. I think at the end of the day, Ron Paul is just an idealist who's ideas are not compatible with a 21st century economy.
Let's just hope those GOP pundits calling Obama the next Jimmy Carter with stagflation coming, are wrong.

[asdfvcx]

Let's just hope those GOP pundits calling Obama the next Jimmy Carter with stagflation coming, are wrong.
11 days ago, in a different thread (http://www.redflagdeals.com/forums/showthread.php?p=7723640), you clearly stated:

US is entering a period of deflation.

Now, you're worried about stagflation? Do you not have much confidence in your economic prediction abilities?

[movieman]

I think the last thing the US govt wants to see is an increase in inflation.

Wage inflation or mass bankruptcy are the only ways to destroy the huge debts that have caused this crash; even if banks are lending, most people who would borrow money have already borrowed so much that banks wouldn't want to lend to them. A credit bubble relies on ever-increasing credit, and eventually that has to stop when incomes can no longer support the interest payments.

Given a choice between inflation or bankruptcy, politicians in a democracy don't have to think too long before making a choice.

[blizzack]

Is everybody who's of the opinion that "this thing is going to tumble" at least aware of how economic cycles work? The symptoms of a recession are the solution and with or without government aid the economy will eventually resusicate itself. Government aid just smooths things out; it doesn't shorten the recession, but it makes for a shallower trough.

Anybody who thinks this is the end of free enterprise, capital markets or the economic dominance of the United States is talking out of their ass. If anything, the U.S. will recover before any other countries, where protectionism and socialism ****** growth.

There are few things that make this recession particularly challenging - such as:
* the complete collapse of financial markets
* how-wide spread the problems are globally
* how the recession hasn't even technically started in most of the world and things are
already getting quite bad
* how there is an almost global housing bubble that has popped or is popping
* there is no dominant economy to help keep things going (US, China, Europe, etc, all facing
the same issues)
* etc... one really could keep going

You could argue that the current recession doesn't really have much to do with the business cylce for a number of these issues...

[resu]

You don't call this huge redistribution of wealth to bail out companies a form of 'Socialism'?

Normally, I would agree with that statement, but in this case, with all the spending, they are acting like a Socialist society.

When did Socialism take money from the working class and redistribute it to the rich?

This is corporatism - or daylight robbery if you would...

[Newbieinvestor]

When did Socialism take money from the working class and redistribute it to the rich?

This is corporatism - or daylight robbery if you would...

Corporatism. Like what we have in Canada.:-0

[pitz]

All the money in the world won't save the US economy. What is needed is a change in mindset. Millions of scientific and technical professionals are either don't have jobs, or are forced to, by this economy, work in 'other' professions that do not make use of their skills. Labour markets are illiquid; investments in skills training are not providing the kind of returns, or even any returns, for a great number of people.

The smartest and brightest people are not in government. The smartest and brightest are not leading our corporations, and are not, for the most part, decision makers.

Most people, right now, are caught up in talking about the capital markets, and how their stocks, bonds, and real estate have lost half (or more) of their value. But the real untold story is in the human capital markets. Paper pushers, some CEO's, etc., who do very little work of any value, make salaries that are often several times more than workers who physically get jobs done and generate a lot of value.

Only once the system is reformed so that the contributions of contributors to the economy are fairly valued, will the US economy start to get better.

[NUTS]

All the money in the world won't save the US economy.

The smartest and brightest people are not in government. The smartest and brightest are not leading our corporations, and are not, for the most part, decision makers.

But the real untold story is in the human capital markets. Paper pushers, some CEO's, etc., who do very little work of any value, make salaries that are often several times more than workers who physically get jobs done and generate a lot of value.

Only once the system is reformed so that the contributions of contributors to the economy are fairly valued, will the US economy start to get better.

Surely every enterprise needs a leader of type - wouldn't you agree?

first off Pitz, I would appoint you as a CEO - you seem bright enough

Then I would ask how you would reform the system

[Newbieinvestor]

Surely every enterprise needs a leader of type - wouldn't you agree?

first off Pitz, I would appoint you as a CEO - you seem bright enough


U.S. is just finishing with a leader who is a 'big talker', is set in his own encrusted world views and blind to new realities, and has made some bizarre mistakes in judgment and predictions.

The US is fine. Just needs a real sherrif to watch over things. I think Obama will do fine.

[AllWheelDrift]

Surely every enterprise needs a leader of type - wouldn't you agree?

first off Pitz, I would appoint you as a CEO - you seem bright enough

Then I would ask how you would reform the system
Naturally his first step in reforming they system after being appointed CEO would be to cut his own salary. ;)

Then again, seeing as we are presuming he would be a much more enlightened CEO, maybe he'd actually deserve a CEO's salary. :lol:

[resu]

Corporatism. Like what we have in Canada.:-0

Although we're moving in that direction, we're not quite there yet - thankfully.


U.S. is just finishing with a leader who is a 'big talker', is set in his own encrusted world views and blind to new realities, and has made some bizarre mistakes in judgment and predictions.

The US is fine. Just needs a real sherrif to watch over things. I think Obama will do fine.

Think of the U.S. as a rabid two headed dog with an I love Jesus collar. One head looks like a mule and the other head looks like an elephant. In the end, the same **** comes out no matter which head you feed. Then think of Nader as a flea that can't be scratched off.

I'm glad I can come back to Canada soon :)

[Thalo]

There are few things that make this recession particularly challenging - such as:
* the complete collapse of financial markets
* how-wide spread the problems are globally
* how the recession hasn't even technically started in most of the world and things are
already getting quite bad
* how there is an almost global housing bubble that has popped or is popping
* there is no dominant economy to help keep things going (US, China, Europe, etc, all facing
the same issues)
* etc... one really could keep going

You could argue that the current recession doesn't really have much to do with the business cylce for a number of these issues...

The major differences between this recession and previous recessions are
-A more globalized economy, in that we all are pretty much on the same economic cycle.
-Internet and media: news travels quicker, farther and to more people. Business news is disseminated on a moment's notice leading to massive shifts to the upside or downside in the stock markets. Far more people are aware of what is going on, leading to somewhat of a self fulfilling prophecy: people think there has been a "complete collapse of financial markets". Consumer confidence is also quite low as a result, spurring more economic bad news.

In most ways this recession is no different than previous ones, it is just happening globally and is far more reported on than ever before. As a result of the media we actually hear about what's happening in the rest of the world, unlike before. We hear sensationalist news stories about financial armageddon every time a bank goes under, unlike before. There have been plenty of times in the past when a lot more U.S. banks went under.

[Newbieinvestor]

Think of the U.S. as a rabid two headed dog with an I love Jesus collar. One head looks like a mule and the other head looks like an elephant. In the end, the same **** comes out no matter which head you feed. Then think of Nader as a flea that can't be scratched off.

on :)

I think there are very big differences between the two parties.

Imagine if we had just completed 8 years of a Gore adminstration rather than bush.

[Thalo]

I think there are very big differences between the two parties.

Imagine if we had just completed 8 years of a Gore adminstration rather than bush.

They'd be far worse off. Instead of a mountain of debt caused by wars, which at least poured a lot of money into the U.S. economy along the way, the U.S. would have a mountain of debt after having poured all their money into buying carbon credits from other countries. Russia would be the most powerful country in the world: exporting oil at $300/barrel (because the situation in the middle east would have only gotten worse, the Saudi's would have become Sadam's or Osama's b1tch) while at the same time taking in billions more selling carbon credits.

[Sgt_Strider]

They'd be far worse off. Instead of a mountain of debt caused by wars, which at least poured a lot of money into the U.S. economy along the way, the U.S. would have a mountain of debt after having poured all their money into buying carbon credits from other countries. Russia would be the most powerful country in the world: exporting oil at $300/barrel (because the situation in the middle east would have only gotten worse, the Saudi's would have become Sadam's or Osama's b1tch) while at the same time taking in billions more selling carbon credits.

I think you're overexaggerating things here. First, the US probably wouldn't be buying carbon credits from other countries because there were no treaties at that time that called for the trading of carbon credits. Second, Kyoto wasn't ratified by the US Senate and therefore no president can implement the terms of that treaty. I think one has to be crazy to think Iraq would invade Saudi Arabia even if Gore was in power. The Saudis are far too important to the Americans.

[blizzack]

In most ways this recession is no different than previous ones, it is just happening globally and is far more reported on than ever before. As a result of the media we actually hear about what's happening in the rest of the world, unlike before. We hear sensationalist news stories about financial armageddon every time a bank goes under, unlike before. There have been plenty of times in the past when a lot more U.S. banks went under.

What is 'new' about this financial armageddon is the size of the 'banks' going under - the biggest in the world, which trumps everything else and makes this situation rather unique.

And the fallout from this is still rather unknown, and likely not over. No one really knows how this mess is going to shake-out, or even if/when the magnitude of the crisis will be fully exposed.