The end of the good old days (transaction, real estate, credit)
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In years to come people will look back on the time period we have just closed and remember it as the good old days, a period of prosperity that will not be seen again for several decades, even in the best case scenario. Moving forward we will see a serious deterioration economy for the next 3-4 years and possibly slow painful recovery after that. The Government and Banks have now put the last nails in the economies coffin with the Bail out Bill. The bill is both a desperate last minute wealth grab and proof that the powers currently in charge are completely incompetent and unable to deal with the problems that face us. The good news is that the people for the first time in decades are beginning to pay some attention to what the elected representatives are doing. Opposition to the bail out was running 100 to 200 to 1 against the bill, and yet congress passed it, showing the American citizens who it is they really represent, and in the process ensuring their own demise. After the election the real pain will begin for the American people as businesses fail in record numbers, and unemployment rises exponentially. Four years from now people will be angry enough to clean house in Washington and demand answers from leaders going forward that make sense. There is no easy way out of the damage we have caused to our country and our standard of life. It is now time to pay the bill for the excesses of the past, and it is a very large bill indeed. The approaching storm that I have been warning about for years, is now at our doorstep. Batten down the hatches and do whatever you can to protect what ever assets you have. This is the time to be in survival mode.
In years to come people will look back on the time period we have just closed and remember it as the good old days, a period of prosperity that will not be seen again for several decades, even in the best case scenario. Moving forward we will see a serious deterioration economy for the next 3-4 years and possibly slow painful recovery after that. The Government and Banks have now put the last nails in the economies coffin with the Bail out Bill. The bill is both a desperate last minute wealth grab and proof that the powers currently in charge are completely incompetent and unable to deal with the problems that face us. The good news is that the people for the first time in decades are beginning to pay some attention to what the elected representatives are doing. Opposition to the bail out was running 100 to 200 to 1 against the bill, and yet congress passed it, showing the American citizens who it is they really represent, and in the process ensuring their own demise. After the election the real pain will begin for the American people as businesses fail in record numbers, and unemployment rises exponentially. Four years from now people will be angry enough to clean house in Washington and demand answers from leaders going forward that make sense. There is no easy way out of the damage we have caused to our country and our standard of life. It is now time to pay the bill for the excesses of the past, and it is a very large bill indeed. The approaching storm that I have been warning about for years, is now at our doorstep. Batten down the hatches and do whatever you can to protect what ever assets you have. This is the time to be in survival mode.
It was false prosperity - with people living on credit and far beyond their means.
The late 90's set the stage for the disaster with the dollar intervention arranged between the US and Japan. The purchase of US treasuries by Japan, China, and other trade partners forced down US interest rates and inflated the value of the dollar, thereby encouraging US consumers to purchase more imported goods on borrowed money.
AEI - Short Publications - Plaza Accord Redux (http://www.aei.org/publications/pubID.5399/pub_detail.asp - broken link)
Yep, it was all a sham. In 2005, 50% of all GDP was housing related. Either appreciation, spending by borrowing on home equity, or actual real estate transactions or building. Think about that - take 50% off of GDP and what do you have ?
And think about this - subprime was the BEST idea that the bankers had. What do you think they will do now ?
Fact is, there is no such thing as a "consumer based economy". If you do not produce goods, you will not survive.
Last edited by jimmyP; 10-05-2008 at 04:54 PM..
Reason: add
Fact is, there is no such thing as a "consumer based economy". If you do not produce goods, you will survive.
We produce a number of goods. The spread between what we consume and what we produce isn't that large. Moving forward it can be correct with a combination of few percent reduction in consumption and a few percent increase in production.
We produce a number of goods. The spread between what we consume and what we produce isn't that large. Moving forward it can be correct with a combination of few percent reduction in consumption and a few percent increase in production.
I agree with Humanoid that it's not too late, but policy really does matter.
I have the sense that the US ruling class is still not done sacking the country's wealth, they have another two or four more years to go.
At that point, maybe they will start focusing again on productivity and improving the
production - consumption = saving + investment
equation.
Basically, you fleece the sheep, you don't slay them, unless you are totally in sacrificial mode.
We produce a number of goods. The spread between what we consume and what we produce isn't that large. Moving forward it can be correct with a combination of few percent reduction in consumption and a few percent increase in production.
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