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Old 03-14-2008, 04:31 AM
 
Location: western East Roman Empire
8,103 posts, read 11,910,988 times
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Based on my information flow and understanding, the recession is mainly a consumption recession in the US and from the fallout of the excessive and mis-allocated investment in housing and to a lesser extent automobiles.

Many major companies still have major infrastructure contracts, especially in the energy sector, that will be implemented this year and through to 2010, both in the US and around the world.

With the right mix of economic policies, the US can use this recession to restore some basic domestic manufacturing, even food production.

The problem is that our current leadership, well, ... sucks ..., and, if the current election campaign is any indication, the chances of getting the economic policy mix right in the next four years are slim, though not impossible.

The people could help by demonstrating a little more discipline and maintaining balanced household budgets, with all that implies about current domestic production (income) and consumption (spending).

How hard is that?

The depth and length of the recession may provide an objective answer ... well, unless of course a mix of policies allow US consumers to live another four years or so in economic fantasy land.

We'll see.

My best advice is to live within one's means, save, even a little, and invest, preferably in productive enterprises, if the policy mix fosters such an environment.

The alternative is further erosion of the country's production base and competitive position.

Good luck!

Last edited by bale002; 03-14-2008 at 05:00 AM..
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Old 03-14-2008, 12:04 PM
 
32,639 posts, read 51,269,611 times
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regarding more jobs for US because of deflation of dollar--read that is happening with auto mfg sector--some European co is bringing more work here vs its plants in Europe

think bush is an idiot that can't do anything right and his advisors have only big cat money at heart--
Greenspan was major factor in making money to cheap and letting mortgage companies totally screw over the us economy--now he actls like he has no clue how it happened on his watch--
where is the incentive to save when the rates are so low--NO WHERE--
people thought the bubble could just keep getting bigger and bigger without bursting--
what law of physics agrees with that

I am very concerned about my daughter and her husband who have condo in FL that they cannot sell for the morgage value and my son who has changed careers after 30 trying to find something with a future--there does not seem to be too much hope for them in the near future...
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Old 03-14-2008, 12:07 PM
 
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just pray OPEC does not go to British based currency for oil prices--we are really screwed if that happens--would see $6-8 a gallon for gas in a heartbeat...
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Old 03-14-2008, 12:57 PM
 
Location: Heartland Florida
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Quote:
Originally Posted by loves2read View Post
just pray OPEC does not go to British based currency for oil prices--we are really screwed if that happens--would see $6-8 a gallon for gas in a heartbeat...
I think high gas prices would be a good thing- they would cause a renewed interest in our bad monetary policy. If people knew that inflation caused by the FED to benefit the elite was the real cause of high oil prices people would demand change. At the very least the economy would collapse because no one could afford any more discretionary spending.
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Old 03-14-2008, 01:55 PM
 
Location: Chino, CA
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Actually Core Inflation Numbers came in flat today (http://www.forbes.com/markets/feeds/afx/2008/03/14/afx4774100.html - broken link), and Import prices actually increased a lot less (http://www.forbes.com/markets/feeds/afx/2008/03/13/afx4768016.html - broken link) than expected last month. Of course government numbers are always being revised, but an ecnomic slow down should have deflationary pressure... hince why the Fed feels it's ok to pump some money into the system.

Actually there was an article stating Dairy product prices should moderate due to the growing supply of milk cows, and the slowing of demand. Production increases expected to slow milk price hikes - The Business Journal of Phoenix:

Besides the weakening of the dollar (due to monetary policy, and drop in confidence), another cause of inflation of our foods could be our governments persistent support for Ethanol (corn prices doubling anyone?). Farmer's producing fewer other crops, etc.

Also, investor speculation on oil and other commodities as a hedge towards inflation has a spiraling affect. Pumping up oil prices, causes other goods to go up, therefore causing more concern for inflation, and additional pumping up of oil as a hedge (we currently have an oil surplus!!).

Essentially there is money and capital out there. Once the Investors get tired of chasing oil and gold (bubble burst?) they'll move on to invest in something else.

Hopefully as oil returns slow down due to over supply and a return to fundamentals... those same Investors will see the increasing value of real estate. Technically, RE can also be considered a hedge on Inflation as a fixed asset.

Yes, there's no incentive to save... so the money's gotta go somewhere. Hopefully back into the US in the form of domestic investments and jobs.


-chuck22b
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Old 03-14-2008, 02:13 PM
 
Location: Heartland Florida
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If real estate inflates again, it will confirm that the economy is permanently devastated. High priced real estate is a sign of economic weakness, and a concentration of wealth at the top.
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Old 03-14-2008, 02:14 PM
 
Location: western East Roman Empire
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Quote:
Originally Posted by chuck22b View Post

Yes, there's no incentive to save... so the money's gotta go somewhere. Hopefully back into the US in the form of domestic investments and jobs.

-chuck22b
You make some good points chuck22b (except about the inflation numbers, which I believe are bogus). By investment, I hope you mean productive investment.

But providing a conducive environment means getting economic policy right. The biggest concern is that most leading politicians have no clue and there is a real risk that a new crop of clueless leaders may actually exacerbate the situation, piling devastating fiscal policy onto an already devastating monetary policy.

Let's prepare for the worst and hope for the best.
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Old 03-14-2008, 02:29 PM
 
Location: Great State of Texas
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CPI does not include energy or food, the two highest expenses we have today.
The CPI is not realistic of current conditions.
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Old 03-14-2008, 02:51 PM
 
Location: Chino, CA
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Quote:
Originally Posted by tallrick View Post
If real estate inflates again, it will confirm that the economy is permanently devastated. High priced real estate is a sign of economic weakness, and a concentration of wealth at the top.
I think that's how it kinda goes (we're a capitalist society)... there is a concentration of wealth at the top. Median Income doesn't really mean much when the wealthy can easily buy 2-3 properties. The median earner will just have to rent.

Household income in the United States - Wikipedia, the free encyclopedia

Last edited by chuck22b; 03-14-2008 at 03:23 PM..
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Old 03-14-2008, 03:12 PM
 
Location: Chino, CA
1,458 posts, read 3,063,360 times
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Quote:
Originally Posted by bale002 View Post
You make some good points chuck22b (except about the inflation numbers, which I believe are bogus). By investment, I hope you mean productive investment.

Yes I really hope that the domestic investors have the best interest of America and their children in mind (stop sending money overseas! invest in renewables, education, and making America globally competitive).... for the increasing amount of foreign investors... i hope that America presents additional value than their other alternatives.

But providing a conducive environment means getting economic policy right. The biggest concern is that most leading politicians have no clue and there is a real risk that a new crop of clueless leaders may actually exacerbate the situation, piling devastating fiscal policy onto an already devastating monetary policy.

Let's prepare for the worst and hope for the best.
I agree with energy and food prices not included into CPI being a farce... but as I noted a lot of those prices can be connected to our domestic policies (ethanol?) and the run up on commodities (whether global demand, speculation, or foreign policies - OPEC/Venezula).

In regards to our current policy makers. I think considering the situation that Bernanke inherited from Greenspan, that he's actually doing a fairly good job. The job of the Fed is to maintain some stability, whether its in the form of controlling growth (through raising rates - inflation was fairly tame in our last 3-4 years of ~3% GDP growth) or reducing the depth of drops (lowering rates, injection, etc.). Therefore giving/maintaining some level of confidence in our Economy. If you look at China with their phenomenal growth, they actually have 7+% inflation rates. I'm sure none of us would tolerate that.

Based on the information he has, the pressure he has, and the criticism and international attention he gets... i think any other lesser man would of already shot himself.

Yes, we should prep for the worse, and definitely hope for the best.

-chuck22b
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