Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I'm interested in how people think a bottom will form. Obviously the downward spiral will stop when a bottom is formed, but what exactly is going to form the bottom? Theoretically we can decline until we are back in the stone age. What is going to put a floor under the economy? In some sense there is a floor where we are at the point when people are only taking care of their most basic needs (basically eating..). Can't go much further than that... But I'm sorta hoping the economy bottoms before that happens! But at the same time I'm at a lose as to how exactly a bottom will form.
I don't have time to read through the next page of what are probably very good posts, so forgive me if someone's already stated it, but I would predict that a bottom will form when a sufficient amount of debt is serviced or, in the event that it has to be written off, the companies/individuals doing the writing off are able to recover from such actions. That will be the bottom, and anyone who claims to know when exactly that will take place is living in a fantasy world. Debt absolutely must be dealt with before savings and investment in new production (i.e. stimulants for real economic growth) can happen.
A reasonable guess as to how long this will happen is probably on the order of at least a few years. Will it be a depression? Probably. Will it be another Great Depression? Probably not, for the simple reason that the abundance of real estate (even if derelict and in depressed neighborhoods) and superior technology available will probably keep us from living in shantytowns or experiencing famines. It's not going to be pretty, though, but the bottom will come and things will get better.
You know that social security is a tax taken out of paychecks. Anyone that paid into the system should be eligible to take out of it. Putting social security money out of reach of the general fund would help more than taking money from people who "earned" it by paying into it.
true, but the problem is, is that there's a funding gap when all the baby boomers start drawing from the system. Somehow, this would have to be addressed. Many in my generation (Gen X), although already paying into the funds for the current retirees don't really see us being able to draw from the system at all in the future. The US can't afford to front the potential gap in draw and obligations coming forth.
But not as much as they were making at the height of the bubble. Unlike the car manufacturers, there is no union to force banks to keep people employed. They will not retain staff they don't need. Period. Forcing them to write down (Wachovia had $122bn in bad loans) loans means that they will have to cut costs because their entire business model is based on making money for their shareholders.
First of all, lets get something straight. There is going to be some pain NO MATTER WHAT HAPPENS.
Is it a better solution for the banks, homeowners, & the nation as a whole to try to compromise ON BOTH SIDES, or do we continue to go down the path we're going now? That's the question. At least w/what I'm saying, the banks WILL MAKE MORE MONEY, and we get to give homeowners a 2nd chance. Also, just to reiterate, this will NOT be a free lunch because part of the profits will have to be given back from the homeowner...(they shouldn't complain because they'd be lucky to get a 2nd chance)
true, but the problem is, is that there's a funding gap when all the baby boomers start drawing from the system. Somehow, this would have to be addressed. Many in my generation (Gen X), although already paying into the funds for the current retirees don't really see us being able to draw from the system at all in the future. The US can't afford to front the potential gap in draw and obligations coming forth.
-chuck22b
Agree 100%. Like you (I believe), I am not counting on SS to be there when I'm ready to take it. Yes, this will be bad for me, but good for the country and future generations. I'm hoping I'm comfortable enough that I won't need it. (Hopefully)
there is a plan to turn things around (but i doubt that the government would consider it to be in their best interest since it is pretty much the opposite of all the things they are trying).
here is a section for those who don't want to read the whole article:
slashes for category three involve the federal government turning over existing resources to the private sector and opening up other profitable production processes that are currently restricted by government. An example of the first type would involve the government auctioning off oil in the Strategic Oil Reserve fund. The result would be more oil and lower prices in the economy. The government has plenty of land, natural resources, and real estate that could be auctioned off.
A simple example of the second type would be the minimum-wage law that prevents workers with low productivity from obtaining a job. There are tons of labor regulations at the federal and state level which prevent job creation and slashing them would be a beneficial antidote for the crisis. Simply allowing midwifes to go into business creates jobs and cuts the cost of giving birth by up to 90%. The same goes for capital. Regulation and antitrust policies are a tremendous roadblock for companies that are trying to survive this crisis. The federal government expends tons of taxpayer money preventing mergers and takeovers in the auto and airline industries only to later provide bailouts and merger-aid packages.
deflation or inflation, the end game is the same. At some point, the US government that became the spender of last resort will have its margin call. The world will no longer finance the biggest debtor nation in history. lawlessness, riots, anarchy, will follow. Screw gold, silver, treasuries. Rural real estate, weapons, and survival gear is the best way to invest.
to my fellow doom and gloom members, i thought that you might like this quote from woody allen:
More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly.
I would predict that a bottom will form when a sufficient amount of debt is serviced or, in the event that it has to be written off, the companies/individuals doing the writing off are able to recover from such actions ... Debt absolutely must be dealt with before savings and investment in new production (i.e. stimulants for real economic growth) can happen.
In principle, absolutely right, I basically stated that in post #8 of this thread
Quote:
In theory, when the jobs of average US workers add enough value to the global economy not only to cover past overspending, but to justify current and future spending.
In practice, however, even deficit-laden economic agents have to consume, at least the basics, while they dig themselves out of a hole.
Therefore, some lending is still necessary, but work must refocus on
production - consumption = saving + investment.
The problem is, right now at least, and as I and others have written elsewhere, US politicians are offering no visible comprehensive plan to turn things around, instead they are still focused on dishing out subsidies (raiding the treasury) to themselves first of all.
Even if there are formally strings attached to a loan to GM, for example, they would have little or no credibility: just look at the about-faces on the TARP so far.
Floridasandy - if we followed your prescription we would end up with one big corporation dominating a nation of paupers instead of a Democratic Republic with a semblance of a middle class. No thanks!
We need to keep resources under public ownership not private exploitation and fight any tendency to monopoly business. This is not a Monopoly board game. This is economic, political and public survival. We cannot trust the profiteers and capitalists to get it right because they have a proven desire to do it wrong for their personal and private gain.
Floridasandy - if we followed your prescription we would end up with one big corporation dominating a nation of paupers instead of a Democratic Republic with a semblance of a middle class. No thanks!
We need to keep resources under public ownership not private exploitation and fight any tendency to monopoly business. This is not a Monopoly board game. This is economic, political and public survival. We cannot trust the profiteers and capitalists to get it right because they have a proven desire to do it wrong for their personal and private gain.
[SIZE=3] [/SIZE]
the government is that big corporation that you are talking about. the country has resources that are not being utilized. to get back on track we need jobs! what we cannot trust is a monopoly to get it right, that monopoly being the federal government. having all your eggs in the government basket leads to what we have right now.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
