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Evidently, we have been in a recession for over a year now . . . and I think the recession will deepen. But I don't think we will go into an actual 1930's style Depression. Also, I think the worst of this mess will be in 2009 and we will be on the way to recovery in a year.
Ani, I am optimistic we as Americans will put together through this but to believe this is a quick fix, and by that I mean a 1 year timeframe to recovery is not being realistic IMO. We are paying the consequences of years of a huge credit bubble that began prior to the Bush administration (and perhaps even prior to Clinton's) but that reached its peak during his tenure. His pro-business policies were a disaster and it only prove that mega corporations can not police themselves and that government supervision is unfortunately needed.
The numbers (the negative ones) are so many I will not have enough room in this post to list all of them but there are a few that are indeed scary. According to leading economist Nouriel Roubini the U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent.” Then he added: “I’ve found that credit losses could peak at a level of $3.6 trillion (yes that's with a T) for U.S. institutions, half of them by banks and broker dealers. If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis. The problems of Citi, Bank of America and others suggest the system is bankrupt. In Europe, it’s the same thing.”
The stock market is way ahead of Nouriel on this, frankly. All bank stocks are converging to $0 because everyone knows big losses combined with huge leverage = zero equity. It’s the same as being upside down on your mortgage: The banks owe more money than the value of their assets will ever be able to pay back.
Bank stocks haven’t hit $0 yet because they still have option value. To wit: never underestimate the amount of money the federal government can throw at the banking system to keep it’s heart beating.
Many countries in the world have experienced perhaps worst situations than ours now but not in the scale of our economy, so there's got to be a light at the end of the tunnel but we all have to be conscious that this process will take many years b/c it took many years of our excesses and granite countertops to build this mess. I with President Obama the best of luck b/c this is not going to be an easy feat by any stretch and whether or not we like or dislike the guy we have to root for him. I was never a Bush supporter but I always wished the best for him b/c he was our President. Too bad he was a total failure in almost any level. He failed in asking all of us to come together as a nation after 9/11 to build a stronger country and instead he told us to go spend the money we didn't have (via credit cards) to take our kids to Disney!
IMO Obama needs to address the nation within the next few days or weeks and lay out the plan and let the American people know of all the hardships coming ahead and to ask for everyone's collaboration. He MUST institute a MORALIZATION policy of ALL the financial companies b/c w/o this it will be impossible to accomplish anything if white collar crime is punished with just a slap in the wrist, and very severe punishment including lengthy jail time must be enforced. All prior CEOs of failed corporations MUST be investigated. A few credible and important analysts such as Meredith Whitney are starting to put the dots together and are finding a co-relation of mega mergers and overly excessive, and sometimes obscene, upper management pay. This can not go unpunished anymore. All in all it's true hard days are coming but we have proven the world again and again that we can not be discounted.
Location: Charlotte,NC, US, North America, Earth, Alpha Quadrant,Milky Way Galaxy
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How is this a local topic again? Just kidding
This isn't a depression. Compared to the 1930s when the GDP lost more than 30%. This is no way like that. But, if you're unemployed, then for you, the unemployment rate is 100%.
It's a long deep recession, that primarily seems to be self induced due to the corruption in our financial system.
Hmm, maybe if we could get the Trillion or so dollars spent on the war back that may help. Does anyone follow where the real money is going?
Ani-you made a comment about cable TV. I talked to a friend who, living on unemployment for a while, and while his wife was working a temp contract job (I personally have an issue with that). I was talking to him about developing a lean budget, no frills, just basic expenses for survival. I told him get rid of cable, he told me his wife needs the food network and HGTV. LOL, that pretty much ended our hardship discussion.
Chef, you are right on target. However, we must remember not to add politics to this thread. Regardless of whose policies were in place and who instituted them or even simply supported them, bottom line, here we are. and, that is truly the subject at hand.
I agree that all financial institutions must be investigated. I also strongly suspect that there are those that appear (on the surface) as being this strong and pristine bank that did not delve into subprime mortgages.....simply hid their involvement well by performing money laundering for loans. (selling the loans to a subsidiary who in turn sold them to another subsidiary who packaged them up and sold them on the market and ended up worthless.) I would hope that each of these worthless securities are investigated and traced back to the originator....and then, that originator would be held accountable. Oh, I know that due to the sheer volume, it would take years, but, that's ok.
None of that discounts the fact that we are in a very severe economic crisis. All the blame, jail time and the like will not make that better. All I can hope is that President Obama has studied the past economic crises enough to come up with some kind of a direction, a solution to guide this country back to greatness. We, the citizens, are the ones that will have to do the "work", no doubt, but, without guidance....it is tough.
I predict this year 2009 will be tough, bitter, angry and sad. 2010 will show signs of improvement, again based on using that credit card, 2011 we will see the curve head back to where we are now AND 2012, (did they Mayans have it right) will be the start......of the end of life as we know it.
I'll ask again: do you have any facts with which to back this up? Or do you just base it on ancient superstitions?
This isn't a depression. Compared to the 1930s when the GDP lost more than 30%. This is no way like that. But, if you're unemployed, then for you, the unemployment rate is 100%.
It's a long deep recession, that primarily seems to be self induced due to the corruption in our financial system.
Hmm, maybe if we could get the Trillion or so dollars spent on the war back that may help. Does anyone follow where the real money is going?
Ani-you made a comment about cable TV. I talked to a friend who, living on unemployment for a while, and while his wife was working a temp contract job (I personally have an issue with that). I was talking to him about developing a lean budget, no frills, just basic expenses for survival. I told him get rid of cable, he told me his wife needs the food network and HGTV. LOL, that pretty much ended our hardship discussion.
Exactly.
Oh, I could go on a rant here . . . about consumerism . . . and what we all feel we must have . . .
Of course, I am using the "editorial WE" . . . and referring to the majority of middleclass Americans and our lifestyles.
If I really really cut back . . . there are things such as the premium dog and cat food I buy . . . when I was growing up, my dad bought huge bags of generic dog food at the "feed store" and that along w/ table scraps are what we fed the dog. She was a sheltie and she lived to be 22 years old!!!! So, evidently she wasn't being fed poorly, even tho I would not dream of feeding my dog and cat that way today.
And no, I don't have to do or maintain or keep a lot of the things I pay for or purchase. I feel I am conservative! Buy my groceries on sale and use coupons and stock up a pantry . . . have a strict rule about buying clothing - has to be marked down under 50% off - preferably, 75% off retail. But I do still buy clothing! I have enuff in the closet to a decade, I would suspect, if I really had to "make do."
I think of things I have purchased and I didnt really NEED them. Sure, I felt it would enhance something in my life . . . but did I NEED the panini maker? Even though I got it at a super bargain price, did I really NEED to spend that $39.99???
So I know I have been part of the consumerism trend in this country. The problem is - millions of people JUST LIKE ME have been purchasing things we could afford, yes, but we didn't need . . . and now we are taking a hard look at our lives and have decided NO MORE STUFF. Good for my bottom line but how is that affecting retail sales? Hmmmm. When we don't go out and purchase products, they sit on shelves, businesses lose money, people get laid off . . . and end up getting their ESC checks, wh/ puts a strain on state budgets, etc. etc. etc. It is truly a domino effect.
My question is . . . the big problems started at the top w/ the banking system, right? Or wrong? Did the big problem start when consumers bought houses they never could afford and defaulted on them? Which came first - the chicken or the egg? The consumer or the banks that created loans that would doubtless lead to defaulted mortgages and foreclosures?
The blame game can go on forever. I can't do a thing about how banks conduct businesses, or how the SEC performs oversight, or what the Feds are going to do . . . or how the Treasury will intervene.
I am just yet another person out here whose taxes are underwriting all the madness. I can take my dollars and dig a hole and hide them . . . but who is going to guarantee they will be worth the paper they are printed on in two years? Inflation . . . deflation . . . stagnation . . .
What is the average American supposed to do when it feels like the whole world around us has gone wacko????
This isn't a depression. Compared to the 1930s when the GDP lost more than 30%. This is no way like that. But, if you're unemployed, then for you, the unemployment rate is 100%.
It's a long deep recession, that primarily seems to be self induced due to the corruption in our financial system.
Hmm, maybe if we could get the Trillion or so dollars spent on the war back that may help. Does anyone follow where the real money is going?
Ani-you made a comment about cable TV. I talked to a friend who, living on unemployment for a while, and while his wife was working a temp contract job (I personally have an issue with that). I was talking to him about developing a lean budget, no frills, just basic expenses for survival. I told him get rid of cable, he told me his wife needs the food network and HGTV. LOL, that pretty much ended our hardship discussion.
Miker, are you reading my mind again? Thanks for saying all this so I didn't have to take the time to
This isn't a depression. Compared to the 1930s when the GDP lost more than 30%. This is no way like that. But, if you're unemployed, then for you, the unemployment rate is 100%.
It's a long deep recession, that primarily seems to be self induced due to the corruption in our financial system.
Hmm, maybe if we could get the Trillion or so dollars spent on the war back that may help. Does anyone follow where the real money is going?
Ani-you made a comment about cable TV. I talked to a friend who, living on unemployment for a while, and while his wife was working a temp contract job (I personally have an issue with that). I was talking to him about developing a lean budget, no frills, just basic expenses for survival. I told him get rid of cable, he told me his wife needs the food network and HGTV. LOL, that pretty much ended our hardship discussion.
great post.
I agree, most people today (including myself) don't know the true meaning of "sacrifice". When my grandparents were alive, they would tell me stories of how things were for them during the depression (and thus why my grandmother never trusted banks and kept her money in a freezer till the day she died. (no joke)). Heartwrenching stories to me were a "normal" way of life back then for many......
Out of all the mess we as a country are going through, hopefully the good that will come out of it would be hopefully people continue their frugal ways when things do start to bounce back.
I agree, most people today (including myself) don't know the true meaning of "sacrifice". When my grandparents were alive, they would tell me stories of how things were for them during the depression (and thus why my grandmother never trusted banks and kept her money in a freezer till the day she died. (no joke)). Heartwrenching stories to me were a "normal" way of life back then for many......
Out of all the mess we as a country are going through, hopefully the good that will come out of it would be hopefully people continue their frugal ways when things do start to bounce back.
Now we do know and history will repeat itself, most people will not continue their frugal ways once everything gets back to normal..
Now we do know and history will repeat itself, most people will not continue their frugal ways once everything gets back to normal..
You could be right, but I'm not 100% sure.
Look for example w/what happened w/gasoline this year. We went up to $4/gallon over the summer, people stopped driving. Now we're back under 1/2 that amount and people aren't driving as much as they used to.
Have they learned? Are we comparing apples to apples? I dunno.....interesting though..
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Regardless of whose policies were in place and who instituted them or even simply supported them, bottom line, here we are. and, that is truly the subject at hand.
