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The questions is what are people going to do to restore a favorable economy, one which is not build on credit but living wages.
Apparently complain on forums.
Anyhow, we people talk about going back to who people lived say 30+ years ago they are actually talking about massive deflation. If this occurred the GDP would decline remarkably, so would the unemployment rate unless you remove all the increases in productivity created since then (You can start by destroying your personal computer).
I think we are in deep, deep trouble. When the bill for this borrowing and spending orgy comes due, look out below. When the cost of debt servicing starts spiking up and treasury auctions fail due to printing of money out of proportion to the production of goods and services, look out below.
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Originally Posted by user_id
Apparently complain on forums.
Then what are you doing here??
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Originally Posted by user_id
Anyhow, we people talk about going back to who people lived say 30+ years ago they are actually talking about massive deflation. If this occurred the GDP would decline remarkably, so would the unemployment rate unless you remove all the increases in productivity created since then (You can start by destroying your personal computer).
I think we are in deep, deep trouble. When the bill for this borrowing and spending orgy comes due, look out below.
Not everyone is in "deep, deep" trouble.
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Originally Posted by Bob from down south
Then what are you doing here??
I'm not complaining about my life and the economy being crappy.
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Originally Posted by Bob from down south
Again, please, in English this time?
Here it is with the 2 typos fixed in the first sentence:
"Anyhow, when people talk about going back to how people lived say 30+ years ago, they are actually talking about massive deflation. If this occurred the GDP would decline remarkably, so would the unemployment rate unless you remove all the increases in productivity created since then (You can start by destroying your personal computer)."
Right this minute, no. If .gov and the Fed manage to crash the dollar or kick off some Weimar-style hyperinflation, it's hard to imagine who wouldn't be in deep, deep trouble. And as they continue to dig the hole we're in deeper, I have less cause to believe we won't see a catastrophe like that.
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Originally Posted by user_id
Here it is with the 2 typos fixed in the first sentence:
"Anyhow, when people talk about going back to how people lived say 30+ years ago, they are actually talking about massive deflation. If this occurred the GDP would decline remarkably, so would the unemployment rate unless you remove all the increases in productivity created since then (You can start by destroying your personal computer)."
The UE rate would decline?? Really? I'm dying to hear the analytical logic behind that.
If you overlay the GDP increases for the last 20 years over the increases in debt load, the curves look largely the same. Most of the GDP delta for decades has not been due to increased production, it has been the illusion of productive activity painted by leverage...by debt. When you default or inflate away the debt above carrying capacity, then you get reduced GDP, millions LESS jobs, and HIGHER unemployment. And we will be forced to live more like we did 30+ years ago (smaller homes, one car, no more sky's the limit $200K educations for junior etc) as a result.
Noting again that GDP growth has been largely an illusion, so also is the idea that America could triple the average family home size...not by being more productive, but by borrowing money into existence to trade our houses back and forth with each other while we moved most of the manufacturing base that actually produces anything overseas. It just does not compute on a macro scale, just as 30% YOY gains in the tech sector did not compute in 1995-2000.
Last edited by Bob from down south; 05-25-2009 at 01:32 AM..
Right this minute, no. If .gov and the Fed manage to crash the dollar or kick off some Weimar-style hyperinflation, it's hard to imagine who wouldn't be in deep, deep trouble.
Its not hard to imagine at all. Those that own real assets will do just fine.
But you are more likely to get hit with lightning than see hyperinflation in this crisis. Hyperinflation is nowhere to be found, consumer prices are declining and there is over capacity everywhere you look.
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Originally Posted by Bob from down south
The UE rate would decline?? Really? I'm dying to hear the analytical logic behind that.
Umm...its pretty simple. If people stopped going to restaurants as much, did not replace things as quickly, purchased smaller houses, stopped buying new electronics etc there would be many businesses that would shutter or reduce their employment. Where would this people find jobs? Canada? The unemployment rate would go up.
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Originally Posted by Bob from down south
If you overlay the GDP increases for the last 20 years over the increases in debt load, the curves look largely the same.
An increase in GDP will tend to cause an increase in debt if everything else is equal.
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Originally Posted by Bob from down south
Most of the GDP delta for decades has not been due to increased production, it has been the illusion of productive activity painted by leverage...by debt.
GDP = Consumption + gross investment + government spending + (exports - imports).
The increases seen in consumption were largely offset by a shift in (exports - imports). As a result the increases in the GDP are of actual increases in economic activity. I mean do you seriously believe that technological has not increased production over the last 20 years? Most small businesses and homes did not even own a computer 20 years ago.
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Originally Posted by Bob from down south
And we will be forced to live more like we did 30+ years ago (smaller homes, one car, no more sky's the limit $200K educations for junior etc) as a result.
And as I said, this would be would represent a massive decline in the GDP. In fact it would be worse than the great depression! What is amazing is that you guys don't even realize you are talking about an economic event that is worse than the great depression! A ~50% decline in GDP! Adjusted (adjusted in 2000 dollars) GDP in 1980 was ~$5.2 trillion it is now ~$11.3 trillion.
If you looked at the actual data you'd find what you are saying is way off. Although consumption (and its associated debt) increased the most during the last 7~8 years this was a rather slow period in terms of GDP growth if you adjust for inflation:
In contrast the 1990's was a period of fairly rapid growth in GDP despite having less debt and consumption. This was of course due to the growing technology industry and the ways it increased productivity.
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Originally Posted by Bob from down south
Noting again that GDP growth has been largely an illusion, so also is the idea that America could see half its population move up to 5,000 sq ft McMansions..
The average home has grown in size dramatically over the years. Why go back to the 1980's though? Why not to the 1800's? Families can live in 400 sf homes they built with their own hands because that is "what people use to do".
This "when I was a kid" stuff is so short sighted....
I am running into so many people who are unemployed or underemployed or not able to go back to college to gain job skills, or participate in professional development. All can be blamed on the recession.
I am starting to be concerned that maybe a whole generation of people may be hurt by this terrible economy. I am not talking about putting food on the table or paying the rent, most people will figure out a way to do that even if it involves working three minimum wage jobs. What I am talking about is the incredibly large number of Americans who are not able to do the type of work that they are talented in. Accountants and Financial Analysts who are working as Check Out Clerks for $7.00 an hour at the grocery store, Marketing Specialists working at Fast Food and IT Professionals working at Walmart. Or Engineers sitting at home all day watching television.
So many talented people with so many skills unable to use them. Isn't this one of the true causalities of the recession?
I do not share the view that "All can be blamed on the recession." Is it a factor? I believe that. College is good and will help open new opportunities and horizons but I there are many people right now with no college that are doing great despite the recession. Those are the people that do not let the world keep them down. I see a lot of parents out there that working hard supporting a family and are still going to college attending night classes but I also see young men and women single with no family obligations complaining that they cannot make it. The difference is having the drive to excel and to stay focus on goals and dreams.
Have you ever read the book "The Greatest Generation"? It is a very inspirational book. That generation of the depression and WWII came out a generation that survived and many did so without a college education. Is the economy terrible? It may be by today's attitudes and expectations of the present generation but it is nowhere near to the great depression and those people came out of it stronger and with great resolve. Today I see a generation compose of many people that crumble at the slightest pressure. I am proud of those that are not allowing this terrible attitude get to them. They just roll up their sleeves and simply say it is time to work harder.
The ones I see complaining about the terrible recession are in my opinion the groups that are always complaining how things are so bad all the time way before the recession started. I will just simply say I admire the orientals and the jews because as a group I do not see them crying and complaining how bad things are. They simply are slowly but surely making sure they make it, going to college and keep chugging along.
Are you aware how many millions of dollars the states return to the federal government because they went unused for scholarship help? There were not enough people requesting money for education.
We were not able to get federal aid for our daughter college education. However, my wife spent countless hours looking in the internet for scholarships. She filled them up and made our daugther sign them and had her write countless essays that were required for many of the scholarship applications. She probably had her sign maybe about a hundred applications. Of course many were not approved but $50 here, a $100 there, $500 over there, and on and on added enough that our daughter had enough college money to pay for all her four years and graduated this may as one of the top ten senior and still has leftover money to about half of her master program. We did not spend a penny for her classes. What does that mean? It means we looked around and work hard to find ways for her to make it through college. My wife has made the comment "this recession thing does not affect us". Why? Because we learned to live within our means way before this recession thing hit us. We did not have to start using saving tips now you read all over the news, magazines, etc. This has been our way of life and it now paid off. So I am not part of the group blaming the recession, Bush, Republicans or anybody else for many of the perils in life.
When it is time to wash cars and work extra hours then, do it. Even then I see people attending night college night classes despite the fact they may now be working at McDonalds. If that is what they have to do, so be it but later they will be proud of not giving up on their education goals. I am proud of those people.
El Amigo I agree. A generalization always leaves some out but on the whole--I wonder if this recession might be just what the doctor ordered for younger Americans in general--living above their means-expecting the world to fall in their laps without paying their dues-spoiled rotten as kids-thinnking reality didn't apply to them-considering owning cell phones and video players, nights out, big houses(granite counter tops, of course) and starting in the middle if not at the top as givens--welcome to the real world--the one the troops in Iraq and Afghanistan know about-the one the Greatest Generation knew about-and the one that those who pulled themselves up by their bootstraps know about--welcome---
El Amigo I agree. A generalization always leaves some out but on the whole--I wonder if this recession might be just what the doctor ordered for younger Americans in general--living above their means-expecting the world to fall in their laps without paying their dues-spoiled rotten as kids-thinnking reality didn't apply to them-considering owning cell phones and video players, nights out, big houses(granite counter tops, of course) and starting in the middle if not at the top as givens--welcome to the real world--the one the troops in Iraq and Afghanistan know about-the one the Greatest Generation knew about-and the one that those who pulled themselves up by their bootstraps know about--welcome---
Thanks for the reply and I agree with your comment. I see hard times as an opportunity and a challenge, not as doomsday. Sadly, many people are crumbling and hoping Uncle Sam takes care of them.
This recession is the result of years of eliminating jobs that existed before globalization took over. The workers didn't go away only the jobs did. The only remaining jobs are in the service sector, consequently the only sector that never had a significant labor shortage. With fewer jobs and greater competition wages can only go down. That's what we have been seeing for the last 25 years.
Bubble economies like in the late 90's and all through the 2000's masked the real problem. In the 90's IT jobs were all the rage. Dot Coms were springing every few seconds and everyone was grabbing that golden ring. When that went bust real estate took over. Those displaced dot com workers went on to become, mortgage brokers, realtors, contractors, anything to do with housing to ride that wave. Others went on to wall street and banking. All connected to the current bubble. When it crashed there wasn't another bubble to take it's place or manufacturing infrastructure to soften the blow.
A country that doesn't produce more than it consumes is a country that is destined to fail.
This recesssio is the result of over spending and accumulation of debt people couldn't pay not globalization. People made plenty of money int eh 90 and early 2000's but they spent 140% of income whch can't gbe sustained. The worold changed just as much in poast generations and peopole adapted to the changes.90% of people are still not bad off in this economy and like other generations will survive it, Some will prosper and other will not just l;ike in the past.
This recesssio is the result of over spending and accumulation of debt people couldn't pay not globalization. People made plenty of money int eh 90 and early 2000's but they spent 140% of income whch can't gbe sustained. The worold changed just as much in poast generations and peopole adapted to the changes.90% of people are still not bad off in this economy and like other generations will survive it, Some will prosper and other will not just l;ike in the past.
Your grasp of the situation is about as good as your writing abilities.
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