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The economy is now in a downward spiral and there doesn't seem much is going to stop it. Over the last year or so exports have been strong and it has helped the Economy from collapsing, but now exports are dropping as the rest of the world goes into recession.
With the majority of other countries also going into recession how exactly will a bottom form? Currently all the bailout money is being used to keep financial institutions working rather than simulating the economy. Will there be any funds left to simulate the economy?
It seems the probability of another depression is raising fairly rapidly.
Well, I am no economist, so I can't really address your points. I think you are probably correct, although I wish I could say otherwise. It certainly appears as though we are going down.
All a person can do is to try to look out for one's individual interests. Try to get out of debt, first. Try to preserve what you already have. Try to keep your job (even though I'd like to quit mine right about now, but I digress). Try to cut unneccesary expenses. This is what I am doing, at any rate. I got out of the stock market completely, used some of it to pay off all credit card debt (my house is paid for) put all my money into CDs (good thing they will now cover up to $250K through the end of 2009). So I have enough cash to live on for at least a year plus what I have in CDs. Once they mature, who knows what to do...
If the dollar completely tanks, we are all scr**wed, however.
The slide will stop when it hits bottom and all the inflation and bogus gains are wiped out. Then the real value of commodities, industry, housing and services will have been determined. With that information the economy will start over.
The bailouts have only been implemented to slow the crash and give the perpetrators of the bubble time to protect their wealth and privilege. There was no intent for these gifts of public money (mine and yours) to prevent or lessen the depth or extent of the collapse. Just delay it.
Will there be any funds left to simulate the economy?
I know what you mean, but let's examine what the word funds means.
It comes from the Latin meaning field.
We have funds when we have enough food supply provided by the relative few so that others can specialize in other economic activities. We also have to transport food to those involved in those other activities.
The first question, then, is, do we have the funds, do we have enough food and transport capability while we work to develop new types of fuel and transport and other innovations that would improve the quality of life?
We still stand on the communications and IT wealth accumulated during the 1980s and 1990s, this will certainly help.
Do we have enough technology, and social and cultural skills to make meaningful progress in the diversification of fuel supplies and modes of transport?
Do we have the political leadership? Do we have leaders with the right vision of the problem and the right vision of the way forward?
To be sure, we have saddled ourselves with inefficient housing and too many transport vehicles using what is increasingly the wrong kind of fuel.
But we still have plenty of food, the main source of fuel is still abundant enough not only to transport food to feed the population, but to invest in diversifying the sources of fuel and modes of transport in the meantime, and the cost of communications is low.
We have funding, then.
And we print money, or should do so, to symbolize that wealth and that potential investment.
But we also print money which symbolizes the corrupt use of our funding, like rats in the grain silo.
Therefore, for the moment at least, the problem is not funding, though it may be if the fat rats eat all of the grain.
When the government stops interfering with the markets... let companies go bankrupt, people will die, stocks will crash, seniors and older adults will lose their savings, and everything is restarted and rebuilt. Or we can keep printing money and try to keep things afloat as the debt goes to 20 Trillion dollars but at least less people die, savings take a hit but aren't gone, less companies go bankrupt, and we have a very prolonged recession... so we have choices.. morals dictate we try to save everyone, so I expect a very long recession... absolutely nothing else will save a system built up around people carrying debt... its lives at stake when you build a system of debt for the uber-wealthy to get rich (CEOs, celebrities, athletes).. next time you turn on the TV or buy their products, you can thank them all for it...
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'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.
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.
Policymakers seem to be mostly trying to maintain credit for current and future spending, I am not convinced that they are focused enough, if at all, on a comprehensive plan to restore the usefulness of the average US job to the global economy.
The other route is protectionism which, briefly, implies higher prices for basic consumer goods, for better and for worse.
I see no other way out of this mess except a complete collapse of our financial system. As other have stated let the corporations go bankrupt. Why are we keeping it afloat anyway? It only benefits the elite few and will be paid by the generations who are innocent to whats is going on.
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 believe its started and ends w/the housing industry.
Home values still need to drop much more in bubble/major metropolitan areas. There will be many more foreclosures to come, but I believe once that industry starts leveling out, the rest of the economy will follow.
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