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Re: Great Depression II
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Newbie
 
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I have not read through this entire thread but I have a real problem with the title of it. please don't insult those people who survived a REAL depression. this is NOT a depression - not even close. my grandparents had no shoes, no food and had to drop out of GRADE school just to help support the family. when I see large numbers of american children in these same circumstances today - then I will be ok with you calling it a "depression"
Posted on: 2008/12/20 16:10
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Home away from home
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I think many countries are very diverse (I assume we are talking about ethnicity and not the economy, as we have already discussed how un-diverse  the US economy is) and I am not sure that diversity by itself necessarily is an advantage, or that much of an advantage.As far as freedom is concerned. Once again I don't think that the US has UNIQUE and unmatched freedom. Many countries have the basic freedoms that the US has and some that the US doesn't have (the rest of the world has moved on as well since 1789 and the Bill of Rights, you know). It might be too much freedom, i.e. lack of regulation, that helped get us into the present mess. On the other hand the Sarbanes-Oxley regulations were introduced as a response to a lack of regulation (or too much freedom, if you will) in the aftermath of Enron and other scandals. Sarbanes-Oxley has been the cause of much business - particularly financial - relocating to centers with GREATER "FREEDOMS" e.g. London and Frankfurt; so much so that there were fears that London would replace New York as the financial capital of the world. Perhaps it is a case of having the right mix of freedom and regulation and not just more freedom than the other guy (which we only think we have, but don't).
Posted on: 2008/12/20 12:49
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I see. Well since 40% of people do not pay income tax, perhaps you would be in favor of some of them making a contribution instead of receiving checks from the treasury. What about property taxes? Are they too low as well? As the number of foreclosures increases presumably property taxes will have to rise on homeowners to make up the shortfall which will presumably help to increase the number of foreclosures and so on. Then of course we are all aware that many people have lost or will lose their jobs so the people in work will have to pay more income taxes just to keep revenues where they are and as the number of unemployed rises (as it will) and so the cycle goes on. Is it your "opinion" that increasing taxes at this particular time is the answer?
Posted on: 2008/12/20 12:04
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Dusted, you're depressing. And probably right. =( Long term, I'm bullish on the U.S.A. If one was to look at the U.S. as a corporation, one could see that we have two key UNIQUE strategic advantages compared to other countries: unmatched diversity and unmatched freedom. These powerful forces tend to overcome any handicaps over the long term. But in the short to mid term.... could we be looking at a stock market ala 1965-1975? ala 1997 - 2007? http://finance.yahoo.com/echarts?s=%5EGSPC#chart1:symbol=^gspc;range=my;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
Posted on: 2008/12/20 5:37
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Unfortunately, I believe you're right. We've been undertaxed for the past 30 years or so. This isn't opinion, it's fact. One doesn't need any deep understanding of economics to understand that the corollary to this undertaxation is that all the money we made all the "productivity increases" of the past 30 years weren't quite what they seemed to be. Much of the productivity increases were real; we're not gonna have wide spread hunger or be wearing rags anytime soon. But the inflated value of assets such as stocks and homes were simply a mirage. The value of the dollar is similarly unsustainable. The only thing(s) that can dig us out of this ditch is (are) new technology(ies) which increase efficiency and/or develop new markets for goods and services. We need another breakthrough(s) on the order of the internet, the computer or the internal combustion engine. Until then: stagflation.
Posted on: 2008/12/20 5:22
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Home away from home
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"Dinged On their Bonus"? Give me a break! Take your Bonus and shove it. Financial guys, reap what you sow!!
Most people don't get bonuses and this year the financial employees should not only not get bonuses but they should pay other peoples bonuses.
Posted on: 2008/12/20 4:24
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You must not work in, or know people who work in, financial services. I can assure you that in this recession metro NYC is ground zero. Everyone I know is either getting dinged on their bonus or laid off. That will filter down quickly.
A lot of the media are based in NYC and therefore are extrapolating the experience of the (fellow elite) people that they know to the whole country. So I draw the opposite conclusion from yours - that well connected folks in NYC with loud microphones feel the pain and see it as Great Depression II while most of the rest of the country isn't so hard hit. I completely agree that the sky is not falling and can't resist pointing out that unemployment was 25% in the Great Depression (now 6.7%) and many people were direly hungry. Today poor people are fatter than the rich to the point where they suffer from obesity related illnesses. Poor people eating so much that it's a health problem puts the talk of Great Depression II into perspective. Quote:
Posted on: 2008/12/20 4:13
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If anyone wants to be truly informed about the crisis and where it is (most likely) heading, read David Rosenberg's latest commentary on the subject. I uploaded a copy HERE:
Some of the key takeaways: -The Debt to Income ratio of US households rose as much in the last 7yrs as it did in the previous 39 years -GDP will fall by 3% next year which would be the worst performance since 1946 -Consumer balance sheets (Total Household Assets minus Debts) are shrinking at an alarming rate, which is highly deflationary. -Because of this (as others mention earlier in the thread) consumer spending gets ugly and the savings rate goes way up. -The housing supply hangover continues and there really is no pent up demand for housing (there is a 68% homeownership rate right now versus around a 64% rate before the mania began) One other interesting point from his article was about household consumption of durable goods. Here's the quote: "The average household owns near $40,000 of non-housing durable assets (i.e. the art, the third SUV, the 4th television set, etc.) a number that has tripled since the debt super cycle began...in the mid 80s. The boomers are not just satiated, but over-saturated, and since of the few booming segments of the economy are consignment stores, it goes without saying that these assets are being liquidated so the marginal household can trim its record debt and interest burden. Again, this is a very deflationary experience, especially for retailers." "We reached a point at the apex of the credit bubble where the average household owned 2.2 motor vehicles (Fido, the dog, owns a fifth of a car). No other country [in the world] has this dynamic, but it is now in the process of mean-reverting and for the first time on record, auto sales have fallen below replacement demand. In other words, we are in the early stages of removing the number of cars and trucks from the roads, interstates and driveways." That last point really makes you wonder about the auto bailout. Overall though, aside from a few dry parts of economist-speak the article paints a pretty interesting picture about the economy. The Appendix of the article includes some interest anecdotes about people's new saving habits.
Posted on: 2008/12/19 15:30
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Home away from home
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trp3 wrote: if US world dominance is coming to an end.....which country will be #1 in the future? just curious. 
Posted on: 2008/12/19 10:22
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We are about to witness the lasting decline of the US consumer and his world dominance. if US world dominance is coming to an end.....which country will be #1 in the future? just curious. Quote: I been drinkin sterno, it's cheap and it gets the job done. if you drink sterno, and then after you wake up the next morning you pass gas, do you light your pants on fire? just curious.
Posted on: 2008/12/19 6:58
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See? Alcohol abuse is on the rise just like in 1932. I been drinkin sterno, it's cheap and it gets the job done.
Posted on: 2008/12/19 5:20
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Quite a regular
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Fixed.
Posted on: 2008/12/19 3:27
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Anyone else concerned about taking advice from someone who doesn't know the difference between "you" and "you're"? In my defense I was stinking drunk when I dished up that post. So there (or is it their?). Credibility issue solved sweet cakes.
Posted on: 2008/12/19 2:33
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The Madoff Ponzi scheme is the tip of the iceberg. I'm sure in the next few months more fraud will be uncovered. It's going to get worse before it can get better.
Posted on: 2008/12/18 22:08
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Home away from home
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Who you talking about?
Posted on: 2008/12/18 22:08
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Quite a regular
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Anyone else concerned about taking advice from someone who doesn't know the difference between "you" and "you're"?
Posted on: 2008/12/18 22:00
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Quite a regular
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This is exactly right. If I'm not mistaken the folks/people that run the country's transit system recently went to washington to ask the government for some of the TARP money. The days of unbridled enthusiam is over. Its back to basics!
Posted on: 2008/12/18 21:11
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Home away from home
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If you were reading the alternative media a year ago, you would have known to put your monetary holdings in gold. I have a friend who told his whole family to do just that and they laughed at him. Who's laughing now?
Posted on: 2008/12/18 20:59
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Home away from home
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Well, IBM is IBM. She is a contract employee and also handles accounts like Avis and others. These are LARGE companies. The local person is in the music industry, don't know where exactly.
Posted on: 2008/12/18 20:57
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Does it manufacture ideas? I am looking at figures for 2002 and the arts/entertainment sector comprises less than 2% of the workforce. Comparing revenues from all sectors of the economy, it doesn't fare much better.
Posted on: 2008/12/18 12:17
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The party is over in the United States. We are about to witness the lasting decline of the US consumer and his world dominance.
We have yet to feel the shock waves of the financial collapse, but if you want to get an idea of how you're life is about to change take a look at the MTAs hearings today. Like many, they are hemorrhaging. Fare hikes and service cuts. Everyone everywhere will be doing it, this is just the tip of the iceberg. Wait until we start have one million a month unemployed. We're on our way. Do you still think it's a good idea to rack up credit card debt and spend, spend, spend? With all the money currently being printed by the Fed inflation is coming. Might not be for another 12-18 months, but it's coming. Anyone know the meaning of stagflation? You will in 2010-2011. So will all your neighbors. Dump you're US stocks, cut up your credit cards and put your savings in gold. It is time to start saving again, just like your grandparents did.
Posted on: 2008/12/18 6:34
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Yes, you are.
Posted on: 2008/12/18 5:07
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Home away from home
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Wow, 303,500,000 American directors, architects, agricultural innovators, blockbuster movie actors, chemists, cultural producers, face transplant specialists and hip hop celebs selling ideas to stupid worker people in the rest of the world. Why didn't I think of that? I'm short sighted.
Posted on: 2008/12/18 0:46
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The United States manufactures ideas. The era of production in the United States is mostly over. The nation produces cultural products, like movies, television, music and art, and it produces engineering like architecture, chemistry, medicine, and agricultural innovations. Ultimately these jobs are cleaner and pay more and often can be accomplished with less labor. The downside is that the uneducated and the stupid will be left to menial services.
Posted on: 2008/12/18 0:15
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This is pointless, it's the same kind of discussion we had about a year ago on the real estate market. All of you who think we are just fine, are the same ones who were screaming about buying nyc/jc real estate back then.
You dont look at the fundamentals nor realize the fact that the economy is not a stock that zaps around real time, every movement & cause/effect takes time to materialize and spread. A year back when the real estate here was still holding up, if you just look at the fundamentals (wallstreet meltdown, financial firms starting layoffs, foreign investors pulling out, with root cause being mortgage). You know the price cannot be sustained. But instead most of you focus on how xyz open house has lots people looking at it. Same here this time, you look at how the store has a lot of shoppers, instead of the fundamentals and realize everything takes time. The thing that really scares me is the dollar and our national debt. Back during the great depression we are one of the largest creditors, now we are so deep in debt as a country. With everything at zero, the only way for government to have more money is to print it. Everything is ok now because all the foreigners have no place to put their money and the only option is put it in the dollar for safety. What will happen once they start pulling out? Lets revisit this thread in 1 year, i really hope i am wrong and everything will be peachy going into 2009 and onwards.
Posted on: 2008/12/17 23:55
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Its a tuff one, the other side of the coin is how can any company compete globally or even domestically in a market where other companies exist with much lower compensation costs? Then what happens?
Posted on: 2008/12/17 23:38
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What industries are these people in? Most of my friends are in the corporate world in JC or NYC, the only ones hit work(ed) for finance companies. I am just now starting to see signs of it hitting other industries, but not nearly as hard...at least yet. I am anxious about 09.
Posted on: 2008/12/17 23:32
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Home away from home
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This is something I was pondering a few years back. (Before our current Ronald Regan fueled crisis blew up in our faces.) That being how would we get out of another great depression? Would you like to hear my thoughts on this? Of course you would. Yeah, manufacturing war stuff got us back on the fiscal track, but what turned us into an economic super power (hence military super power... $ = dominance) was manufacturing stuff after the war ended and having the money to buy that stuff. The Republican mantra has been that free trade is great, Walmart is great, unions are bad. How are we going to manufacture and then buy our way out of a great depression if we no longer manufacture anything? If Republicans are successful in their quest to lower the wage of blue collar Americans, how can we compete with 3rd world nations other than becoming a 3rd world nation ourselves? For you take a "shower before work" folks, what will your services be worth if there is no money left to pay your salaries? (If the blue collar folks are no longer making enough money to do anything other than survive.) The is the drain I've watched Republicans trying to take us down. (And succeeding.) It's a religion to them. They don't think it through. (Even Republicans I know that are highly intelligent.) All they know, all that feels good to know is that everything that smells of liberal is bad. I'll say it again, how will we continue to be a super power when we no longer manufacture anything? When the wages of American workers laps into a vicious cycle of who is willing to work for less to buy food for their family this week? John Steinbeck asked that question 70 years ago and it's a question that's just as valid today.
Posted on: 2008/12/17 23:14
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Home away from home
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i wouldn't use the word "hyperbole" when comparing today's economic crisis with "The Great Depression" of 1929-39. it's more just that no word will really fit, but comparisons can be made.
it's certainly not just media hype. things are very different than they have been before. i cannot get a full-time job in the career path that i have over 30 years' experience in. the number of craigslist ads for shares seem to have doubled. not only are people doing 2 and 3 part-time jobs, but also people in corporate settings are doing 2 and 3 people's work. experienced folks are being hit with substantial paycuts. a friend of mine is a senior documentation architect with IBM and her pay is being cut 14%, take it or leave it. a few months ago, that could never have flown. another person i know just had his pay cut too, substantively enough that he has to sublet his apartment and rent a share for himself. this means that layoffs are not reducing payroll costs enough so the reductions are reaching up into middle management levels. they can't afford to lose the employee, but they can't afford to pay them either. not media hype.
Posted on: 2008/12/17 16:06
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Unemployment:
1928 4.2% 2006 4.6% 1930 8.7% 2008 November 6.7% 1932 23.6% 2010 ? The height of unemployment during the great depression didn't peak until 1933, four years after the crash. While markets, information and the government are all responding more quickly today, after the great depression, the economy required twelve years and a world war to recover. Unemployment only returned to pre-crash levels because of the dramatic increase in demand for materials resulting from world war, first by selling arms to allies (on credit) and then building war materials for the nation.
Posted on: 2008/12/17 15:02
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