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Old 02-18-2013, 09:59 PM
 
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When the recession and financial collapse happened in 2008 in the US, Bush and his policies were blamed for it. Yet most of Europe also had a major economic downturn and their policies are much different than George Bush's were.
Why would such different policies lead to the same economic recession?
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Old 02-19-2013, 10:39 AM
 
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Actually, Europe has done worse.

The truth is, that only a know-nothing would heap all the blame on George Bush. Hey, I didn't like the guy, but the wheels for the fiasco were already in motion before Bush took the oath of office, chiefly because of the government's wholesale intervention in the housing market beginning around 1995. Essentially, the immutable laws of underwriting were torn up in order to achieve social engineering, which meant that untold millions bought homes that they had no business buying. And because government supplied cash came sluicing through the markets, prices shot up to insane and unsustainable levels. If you disagree, all you have to do is look at Spain which went through an almost identical problem, and now has unemployment at the 25% mark.

The truth is that 2008 was not a recession, but the beginning of a depression. A recession is essentially a price adjustment, while a depression is a balance sheet adjustment. We are still liquidating and reducing balances as we speak through foreclosures, writedowns, refinancing, etc. Meanwhile, the
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Old 02-19-2013, 10:59 AM
 
Location: WA
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Quote:
Originally Posted by cpg35223 View Post
...
The truth is that 2008 was not a recession, but the beginning of a depression. A recession is essentially a price adjustment, while a depression is a balance sheet adjustment. We are still liquidating and reducing balances as we speak through foreclosures, writedowns, refinancing, etc.
...
So true.

We spent years building high debt, high leverage, high regulation, high taxation, and policies that encourage resources and efforts to seek opportunities elsewhere. Words varied between US and Europe but the bottom line burden of central planning was/is consistent.
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Old 02-19-2013, 12:32 PM
 
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Europe is worse. The solution to too much debt isn't austerity because all that does is increase the debt burden.
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Old 02-19-2013, 12:41 PM
 
Location: West Paris
10,263 posts, read 10,022,011 times
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Quote:
Originally Posted by cpg35223 View Post
Actually, Europe has done worse.

The truth is, that only a know-nothing would heap all the blame on George Bush. Hey, I didn't like the guy, but the wheels for the fiasco were already in motion before Bush took the oath of office, chiefly because of the government's wholesale intervention in the housing market beginning around 1995. Essentially, the immutable laws of underwriting were torn up in order to achieve social engineering, which meant that untold millions bought homes that they had no business buying. And because government supplied cash came sluicing through the markets, prices shot up to insane and unsustainable levels. If you disagree, all you have to do is look at Spain which went through an almost identical problem, and now has unemployment at the 25% mark.

The truth is that 2008 was not a recession, but the beginning of a depression. A recession is essentially a price adjustment, while a depression is a balance sheet adjustment. We are still liquidating and reducing balances as we speak through foreclosures, writedowns, refinancing, etc. Meanwhile, the

It depends of countries.There are huge differences !!
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Old 02-19-2013, 01:02 PM
 
Location: Victoria TX
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Because it is all one global economy, and each nation taps into it in their own way, and manages their own home resources in their own way.
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Old 02-19-2013, 01:07 PM
 
Location: West Paris
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Originally Posted by jtur88 View Post
Because it is all one global economy, and each nation taps into it in their own way, and manages their own home resources in their own way.

Good point : Ok:
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Old 02-19-2013, 02:32 PM
 
Location: Ohio
18,096 posts, read 13,289,702 times
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Originally Posted by kanhawk View Post
When the recession and financial collapse happened in 2008 in the US, Bush and his policies were blamed for it. Yet most of Europe also had a major economic downturn and their policies are much different than George Bush's were.
Why would such different policies lead to the same economic recession?
Because those people are all wrong.

They don't call it the 1st World for nothing, you know.

We're 1st World States because we developed first, but not the 1st World is facing intense competition from the 2nd and 3rd World and former 4th World States (that are now 3rd World).

For European States, this competition is only part of the problem. The other problem is demographics as it relates to their social welfare programs. The Europeans are in the same boat as America with an aging population and not enough workers to pay for the social welfare programs. For the US, the only programs dramatically affected by worker to beneficiary ratio are Social Security and Medicare. For Europe, it's nearly all of their social welfare programs.

One thing you notice about States that have very high tax rates and lots of social welfare programs, is that they have lower than average Employment-to-Population Ratios.

For example, since 1991, Germany averages 53.7%; Spain 45.4%; Italy 43.7%; Greece 47.3%; France 50%; United Kingdom 57.6% and so on.

Now, a few things about that, because it is misleading. Notice the low rates for Spain, Italy and Greece. They are all southern Mediterranean, and they all suffer from the North/South Dichotomy, which is politically and socially (and to some extent) economically polarizing. It's what you think it is....just like the Northern/Southern Hemisphere Dichotomy, and even like the old US North-South Dichotomy. The north is industrialized, urban and very wealthy, while the south is agricultural, rural and very poor.

And what I want you to take from that is without the Dichotomy, their Employment-to-Population Ratios would fall somewhere between France and Germany.

Aside from that, why are the lower than the typical 62+% in the US?

Because of their social welfare programs and the high rates of taxation necessary to fund them. Social welfare programs are not free....there's a trade off, and the trade off is jobs lost permanently.

You're going to tell an American woman to stay at home and be a mom?

Yeah, right, good luck with that.

European woman....who are "liberated" (snicker)....stay at home.

So when you're already struggling as European States are, and you lose jobs, it has a tremendous negative impact. So we have inefficiency caused by a surplus of labor due to global competition, and then gross inefficiency with their social welfare programs due to demographics an low worker-to-beneficiary ratios.

True, both Norway and Denmark are just over 62.0% and the Netherlands averages 59.3%, but then Norway and the Netherlands produce oil and natural gas. "But so does the US." It's per capita petro-chemical production. Norway and Denmark also have an higher ratio of military-to-population, greater than the US, and while the ratio of military-to-population in the Netherlands is less than Norway and Denmark, it is only slightly less than the US.

For the US, the recession was caused by surplus labor and wages that are flat/declining. Like Europe, the US cannot compete globally and so suffered job losses. The US does not have the social welfare programs that Europe has, but it wastes money nonetheless, and it leads to inefficiency.

So these issues of global competition creating surplus labor, or flat/declining wages, or both are going to be persistent throughout the next several decades, through at least 2060.

You still have 4th World States waiting to be developed to 3rd World level and beyond.

And still we haven't addressed the issue of competing currencies...a problem for the US, but not for Europe and Russia or the rest of the world.

Both the US and Europe will have to reinvent themselves and learn new ways to do things.

Economically...

Mircea
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Old 02-19-2013, 03:34 PM
 
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Originally Posted by cpg35223 View Post
Essentially, the immutable laws of underwriting were torn up in order to achieve social engineering, which meant that untold millions bought homes that they had no business buying.
Haven forbid we limit the number of houses sold so that we don't sell houses to unqualified buyers.


If 1 in ten from social group A is qualified and 1 in 100 from social group B is qualified, the population is split between the two 50/50, and the law requires 50/50 loans to be written then you turn down nine buyers out of ten from group A. Do that and you get no housing bubble. The law doesn't require you to brake the law.
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Old 02-19-2013, 03:48 PM
 
621 posts, read 548,442 times
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Originally Posted by Mircea View Post
For the US, the recession was caused by surplus labor and wages that are flat/declining. Like Europe, the US cannot compete globally and so suffered job losses. The US does not have the social welfare programs that Europe has, but it wastes money nonetheless, and it leads to inefficiency.
The hourly wages are flat/declining, but the total compensation packages are on the upswing. Wealth has been redistributed from the middle to the top. This leads to a less efficient economy. And relative economic depression. Functionally making the top relatively less wealthy compared to the bottom will tend to lead us out of the recession. The over supply of labor in the world is a function of the underpayment of those workers. Normal market forces will take quite some time to get wages to equalize between 1 st 2nd ad 3rd world countries.


We can if we chose put pressure on our trading partners to speed up this process.
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