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Poll

How does the state of the US economy look like to you?

Very good. A bright future ahead. :]3%3% - 2
Good. Some minor hiccups, but onto moderate growth.9%9% - 6
Meh. Things could be better, things could be worse.15%15% - 10
Not good. Some serious problems, but can be dealt with.23%23% - 15
Worrisome. We are/can expect a moderate/deep recession.17%17% - 11
Dreadful. Certainly a depression. Tough times ahead.17%17% - 11
Apocalyptic. A total economic meltdown. God save us.10%10% - 7
I don't know.1%1% - 1
I don't care. Why am I voting?1%1% - 1
Total: 64
2008-01-30 13:53:09
Phrozenbot
Member
+632|6625|do not disturb

Derivatives amount to $516 trillion. The financial sector in the US and the world are very vulnerable right now. Banks are going to be forced to show their balance sheets and we can safely assume there are more losses ahead. The question is, how much, and what affect will it have?

James Turk, head of Goldmoney.com on the Korelin Economics Report. (watch the video before voting please)

My opinion? I think a lot of these derivatives are fraudulent as we saw with the rogue Societe trader, so I wouldn't be surprised if there was some very major losses ahead. The fact the Federal reserve lowered the discount rate, increasing the amount of money they can lend to banks by printing more money, will lead to higher inflation. The healthiest thing that could have happened was to just let the market correct itself. It probably would have fell 4,000 points and then we could go on with having a real economy. But we'll definitely have more inflationary problems ahead once these excess dollars start washing ashore.

Edit: I'd just like to say since much of the financial sector in the US is intertwined in the world market, this will very well affect those outside the US.

Last edited by Phrozenbot (2008-01-30 14:03:05)

2008-01-30 13:54:42
usmarine
Banned
+2,785|6771

My economy is fine.  That is all I care about.
2008-01-30 13:56:33
TheDarkRaven
ATG's First Disciple
+263|6634|Birmingham, UK
Dreadful - a recession is inbound, and it's going to be bad. India and China should come out stronger than the USA after all this is done and dusted (could be a decade or even two), but who knows what Russia will be like!

usmarine wrote:

My economy is fine.  That is all I care about.
Ah, yes - war will never cease to be.

Last edited by TheDarkRaven (2008-01-30 13:57:19)

2008-01-30 14:01:26
ATG
Banned
+5,233|6539|Global Command

usmarine wrote:

My economy is fine.  That is all I care about.
Good for you.

I know a lot of business people in Southern California. We are really hurting. My gross revenues are down 60%. As are my peers. As are the trucking companies that ship the goods.

Rain for me normally equals calls. The recent rains made no difference whatsoever. People are afraid.

I blame the motherfucking government; they spend recklessly like there is no consequence.In RL they are, and the people know it.
The know a reckoning is due.

Do you know about the tax increases that are scheduled to kick in in 2010?


Many big corporations have their assets tied up in junk investments. As bad a problem as the mortgage crysis.
Do you own a house Marine. I doubt it. If you did, you would have seen a plunge in your equity. Your economy wouldn't be so fine.
2008-01-30 14:03:43
usmarine
Banned
+2,785|6771

ATG wrote:

Do you own a house Marine. I doubt it. If you did, you would have seen a plunge in your equity. Your economy wouldn't be so fine.
I do.  And I foresee no problems, nor have any problems at the moment.  Its called not living with credit cards and not buy a lot of unnecessary shit.
2008-01-30 14:04:53
Mekstizzle
WALKER
+3,611|6631|London, England
Before I kept on hoping the dollar would fall so I could go on a nice shopping spree in the US&A, but now I'm seeing it hurt this place.

And so I've gone from:

https://i7.photobucket.com/albums/y285/iMech/1-6.png

to:

https://i7.photobucket.com/albums/y285/iMech/2.png
2008-01-30 14:04:54
ATG
Banned
+5,233|6539|Global Command

usmarine wrote:

ATG wrote:

Do you own a house Marine. I doubt it. If you did, you would have seen a plunge in your equity. Your economy wouldn't be so fine.
I do.  And I foresee no problems, nor have any problems at the moment.  Its called not living with credit cards and not buy a lot of unnecessary shit.
I don't believe you.
2008-01-30 14:05:54
Phrozenbot
Member
+632|6625|do not disturb

usmarine wrote:

ATG wrote:

Do you own a house Marine. I doubt it. If you did, you would have seen a plunge in your equity. Your economy wouldn't be so fine.
I do.  And I foresee no problems, nor have any problems at the moment.  Its called not living with credit cards and not buy a lot of unnecessary shit.
So if a depression happens, you'll still have a job? Or if the dollar becomes worthless, you won't be mad you have lost all your savings?
2008-01-30 14:07:00
usmarine
Banned
+2,785|6771

Phrozenbot wrote:

usmarine wrote:

ATG wrote:

Do you own a house Marine. I doubt it. If you did, you would have seen a plunge in your equity. Your economy wouldn't be so fine.
I do.  And I foresee no problems, nor have any problems at the moment.  Its called not living with credit cards and not buy a lot of unnecessary shit.
So if a depression happens, you'll still have a job? Or if the dollar becomes worthless, you won't be mad you have lost all your savings?
I think you are taking it a bit too far.
2008-01-30 14:10:01
Phrozenbot
Member
+632|6625|do not disturb

usmarine wrote:

Phrozenbot wrote:

usmarine wrote:


I do.  And I foresee no problems, nor have any problems at the moment.  Its called not living with credit cards and not buy a lot of unnecessary shit.
So if a depression happens, you'll still have a job? Or if the dollar becomes worthless, you won't be mad you have lost all your savings?
I think you are taking it a bit too far.
That wasn't my point, but feel free to correct me as to why. Who wants a depression or hyper inflation?
2008-01-30 14:10:05
KEN-JENNINGS
I am all that is MOD!
+2,973|6642|949

Actually, I was talking to a buddy of mine heavily involved in the mortgage/lending industry and he was sounding rather optimistic about that sector of economy.  Apparently lenders are consolidating loans (good and bad) to shore up consumer and government confidence in the sector.  From what he was saying, it seems like the mortgage industry already took their biggest hit and their biggest problem for them in the foreseeable future is the idea that public perception of the mortgage industry and economy is bad, so people are very fickle about refinancing or even securing a loan.
2008-01-30 14:12:40
usmarine
Banned
+2,785|6771

Phrozenbot wrote:

That wasn't my point, but feel free to correct me as to why. Who wants a depression or hyper inflation?
Ken explained it very well, and I agree.
2008-01-30 14:14:44
Mekstizzle
WALKER
+3,611|6631|London, England

KEN-JENNINGS wrote:

Actually, I was talking to a buddy of mine heavily involved in the mortgage/lending industry and he was sounding rather optimistic about that sector of economy.  Apparently lenders are consolidating loans (good and bad) to shore up consumer and government confidence in the sector.  From what he was saying, it seems like the mortgage industry already took their biggest hit and their biggest problem for them in the foreseeable future is the idea that public perception of the mortgage industry and economy is bad, so people are very fickle about refinancing or even securing a loan.
Wait

The problem was that people weren't paying back cos they....cos they're shit at handling their finances. So "they" stopped lending and it caused this whole crash shit (or something). Now, the ideal solution wouldn't be to just continue lending again. Because nowt seems to have changed and they're (clients) not gonna start magically paying back (lets face it, most people will still act like a douche, financially). Sure, resuming the lending would work in the short term. People would think all is well. But......long term, won't it fuck things up.

I'm not so clued up to the whole sub-prime crisis, but....it's something like that right.
2008-01-30 14:16:50
Phrozenbot
Member
+632|6625|do not disturb

KEN-JENNINGS wrote:

Actually, I was talking to a buddy of mine heavily involved in the mortgage/lending industry and he was sounding rather optimistic about that sector of economy.  Apparently lenders are consolidating loans (good and bad) to shore up consumer and government confidence in the sector.  From what he was saying, it seems like the mortgage industry already took their biggest hit and their biggest problem for them in the foreseeable future is the idea that public perception of the mortgage industry and economy is bad, so people are very fickle about refinancing or even securing a loan.
But you have credit revulsion. Paying loans back whiles commodities and services increase because of inflation doesn't sound all that positive to me.
2008-01-30 14:19:57
Pug
UR father's brother's nephew's former roommate
+652|6552|Texas - Bigger than France
I went to see a speaker last week - he's usually on CNBC talking about money.  Said there's a 40% of a recession, which if it occurs it'll be for 1/2 year and slight, followed by a comeback by end of year.  He also said that there's only three types of economists: those who can count, and those who can't.

I believe him.

ATG - sorry to hear about your biz.  I was reading about how the western US has been in a "wet" period since the 1930s, and moving towards a dry period in the future - in National Geographic this month.  I saw that la Nina is supposed to end late this year, so hopefully the weather will flip back to normal.
2008-01-30 14:24:31
KEN-JENNINGS
I am all that is MOD!
+2,973|6642|949

Mek-Izzle wrote:

KEN-JENNINGS wrote:

Actually, I was talking to a buddy of mine heavily involved in the mortgage/lending industry and he was sounding rather optimistic about that sector of economy.  Apparently lenders are consolidating loans (good and bad) to shore up consumer and government confidence in the sector.  From what he was saying, it seems like the mortgage industry already took their biggest hit and their biggest problem for them in the foreseeable future is the idea that public perception of the mortgage industry and economy is bad, so people are very fickle about refinancing or even securing a loan.
Wait

The problem was that people weren't paying back cos they....cos they're shit at handling their finances. So "they" stopped lending and it caused this whole crash shit (or something). Now, the ideal solution wouldn't be to just continue lending again. Because nowt seems to have changed and they're (clients) not gonna start magically paying back (lets face it, most people will still act like a douche, financially). Sure, resuming the lending would work in the short term. People would think all is well. But......long term, won't it fuck things up.

I'm not so clued up to the whole sub-prime crisis, but....it's something like that right.
The problem was that lenders were lending to people who really couldn't afford the loans.  A lot of mortgage brokers fudged income and asset numbers to push loans through so they could get their broker fees.  People were securing loans that they couldn't afford, and some lenders were complicit - as long as funding is going through, everyone makes money.  As soon as people couldn't afford to pay their loans that they shouldn't have got in the first place, all hell broke loose.  Lenders stopped funding loans to a lot of people that a year prior would have gotten them with minimal questioning.  A massive amount of people defaulted, which cut real income earnings by banks and lending institutions.  Some banks (like Countrywide) had so many sub-prime loans out that even with selling their prime loans to other banks and government institutions like Fannie Mae they did not have enough operating income to continue.  Without money to continue day-to-day operations, some lenders could not continue any lending at all, including mortgages.

The solution is to constantly surveill the lending industry to make sure this type of crisis does not happen again.  Certainly there were complicit lenders and even collusion between lenders in regards to the above-mentioned practice.  Sometimes institutions must go through a bottoming out process to function more transparently and efficiently.
2008-01-30 14:25:05
Kmar
Truth is my Bitch
+5,695|6611|132 and Bush

KEN-JENNINGS wrote:

Actually, I was talking to a buddy of mine heavily involved in the mortgage/lending industry and he was sounding rather optimistic about that sector of economy.  Apparently lenders are consolidating loans (good and bad) to shore up consumer and government confidence in the sector.  From what he was saying, it seems like the mortgage industry already took their biggest hit and their biggest problem for them in the foreseeable future is the idea that public perception of the mortgage industry and economy is bad, so people are very fickle about refinancing or even securing a loan.
Here in Florida they just passed passed a "super" homestead exemption. It doubled the tax exemption from 25k to 50k and added portability. I'm hoping that will bring back some of the confidence. It's still an awesome time to buy. I've still got closings lined up. The only worrisome thing is we have had a project that has been delayed a few times. People are getting approved and doing stupid shit before they close. We have had a couple fall through because of financing after the fact. It's frustrating.
Xbone Stormsurgezz
2008-01-30 14:30:36
KEN-JENNINGS
I am all that is MOD!
+2,973|6642|949

Phrozenbot wrote:

KEN-JENNINGS wrote:

Actually, I was talking to a buddy of mine heavily involved in the mortgage/lending industry and he was sounding rather optimistic about that sector of economy.  Apparently lenders are consolidating loans (good and bad) to shore up consumer and government confidence in the sector.  From what he was saying, it seems like the mortgage industry already took their biggest hit and their biggest problem for them in the foreseeable future is the idea that public perception of the mortgage industry and economy is bad, so people are very fickle about refinancing or even securing a loan.
But you have credit revulsion. Paying loans back whiles commodities and services increase because of inflation doesn't sound all that positive to me.
No, it isn't positive.  Some people will default on their loans because of inflation - oh well (as far as I am concerned).  The industry must take the hit, and people will have to start afresh.  It sucks, but at this time it is inevitable.  In my opinion, short of a huge correction in our economy, there really isn't anything a minor adjustment will do that will fix this.
2008-01-30 14:32:42
usmarine
Banned
+2,785|6771

ATG wrote:

usmarine wrote:

ATG wrote:

Do you own a house Marine. I doubt it. If you did, you would have seen a plunge in your equity. Your economy wouldn't be so fine.
I do.  And I foresee no problems, nor have any problems at the moment.  Its called not living with credit cards and not buy a lot of unnecessary shit.
I don't believe you.
k

Well you see, I do not own a bunch of crap.  I do not own jet skis, ATV's, motorcycles, guns, hot tubs, etc.  I have a modest house with no pool or anything like that.  Have a decent car, and big ass TV, and that's really about it.  I do not have any credit cards.  I do not have any fuel or department store cards.  I only buy what I need and try to keep the "extra" stuff to a minimum.  If I want something, I save up the cash for it and them buy it.  Simple concept really.
2008-01-30 14:39:15
Kmar
Truth is my Bitch
+5,695|6611|132 and Bush

One thing people fail to factor in when home values decrease is that housing affordability is up. People that were once priced out of the market (due to cost not credit) are now able to purchase a home and build wealth. Median income families are gaining buying power. We have a tendency to only look at the negative side of things.
Xbone Stormsurgezz
2008-01-30 15:04:59
dark110
Member
+37|6632|Chicagoland
For all of you people who think you unerstand economics, allow me to explain.

First off, a recession is having two straight quarters of reduced Gross Domestic Product or Real Income Growth. While I think the 1st Q of 2008 may be slower than Q4 2007, I think the economy will recover and show growth by Q2 of 2008 thus keeping us out of a recession by definition.

Among the reasons:

1. Stimulus package. Much of the $150 billion or so they will be handing out will get spent almost immediately. Even if it is used to pay off debt, it will circulate through the economy and ultimately cause much more then $150 billion in spending. The tax cut portion will also allow small biz to keep more money. This money will either be spent or invested in new employees, etc, once again causing a greater increase in GDP than the amount invested in the stimulus. This is trickle down at its finest.
2. Housing. I think we have about reached bottom on the housing crash. Fed is expected to lower rates again this coming week. This is going to make 15 & 30 year fixed payments quite attractive versus renting. People who were sitting on the sidelines will start jumping in. People who were going to have to sell may be able to hang on. People who couldn't have qualified to refinance at higher rates now may be able to. Overall, it will cause a very quick firming of the housing market.

3. Dollar strengthening. Despite all the gloom and doom, I believe the dollar will begin to strengthen. Much more money, investment and available credit has been wiped out of our economy than the Fed has put back into it. Thus, if they actually still measured the money supply we would find that it has actually dropped. As foreigners realize this, American assets will start to climb in value. They will be buying our stocks, our real estate and anything dollar denominated to save them from their own plummeting currencies, thus driving up the prices of American assets, which in turn will spur more American Spending.

4. Wages and Inflation - for those with no real estate exposure we will only see increased spending. Wages are rising, albeit quite slowly. Prices are also rising for most of the goods a lower income household buys. Since generally they already spend everything they make, they will continue to spend everything they make plus any raises they get. And yes most employees still do get raises.

5. Presidential election - Presidential elections either bring the prospects of little change for those doing well or much change for those yearning to better. This will lead to great optimism for all as the year unfolds. Optimism and hope brings productivity. People will figure a way to make things better for themselves and the economy will benefit.

6. Everyone thinks things will get worse. When consensus is this strong in one direction things usually happen in the other direction. 2 years ago, everyone was saying that you could never lose money in real estate. I wanted to sell my home, but wife wouldn't let me because you have to live somewhere. But the point being, when everyone thinks sell, you need to buy. When everyone says buy, you need to sell.

These bubbles and subsequent crashes of various sorts happen about 20 times in the average person's lifetime. People don't understand that it is just a natural cycle and thus they make decisions that may haunt them for the rest of their lives. The world is not ending, the economy is far from dead, the dollar is not going to be worthless, so please make sure you think very hard and look at all the evidence before making a decision that will affect you for the rest of your lives. 30-40 years from now people will be talking about how they wished they would have stayed in stocks, they will still be waiting to get even on gold, they will be wallpapering their bathrooms with Euros, they will be ruing over the house they let go because they were upside down, and is now worth 10 times what they had owed on it.
2008-01-30 15:08:22
KEN-JENNINGS
I am all that is MOD!
+2,973|6642|949

dark110 wrote:

For all of you people who think you unerstand economics, allow me to explain.

First off, a recession is having two straight quarters of reduced Gross Domestic Product or Real Income Growth. While I think the 1st Q of 2008 may be slower than Q4 2007, I think the economy will recover and show growth by Q2 of 2008 thus keeping us out of a recession by definition.
That makes you sound like an idiot.  While that is the dictionary definition of a recession, virtually no economist uses that defnition in describing a recession.

You really didn't explain anything, you just speculated.  Not that I agree or disagree with what your saying...
2008-01-30 15:11:30
Phrozenbot
Member
+632|6625|do not disturb

KEN-JENNINGS wrote:

Phrozenbot wrote:

KEN-JENNINGS wrote:

Actually, I was talking to a buddy of mine heavily involved in the mortgage/lending industry and he was sounding rather optimistic about that sector of economy.  Apparently lenders are consolidating loans (good and bad) to shore up consumer and government confidence in the sector.  From what he was saying, it seems like the mortgage industry already took their biggest hit and their biggest problem for them in the foreseeable future is the idea that public perception of the mortgage industry and economy is bad, so people are very fickle about refinancing or even securing a loan.
But you have credit revulsion. Paying loans back whiles commodities and services increase because of inflation doesn't sound all that positive to me.
No, it isn't positive.  Some people will default on their loans because of inflation - oh well (as far as I am concerned).  The industry must take the hit, and people will have to start afresh.  It sucks, but at this time it is inevitable.  In my opinion, short of a huge correction in our economy, there really isn't anything a minor adjustment will do that will fix this.
I agree with the personal responsibility for the most part, but it is sickening how predatory these loans were towards minorities.

You make a lot of good points and they are very correct. I believe some banks don't even want to do business with Countrywide anymore.

The root cause though is the Federal reserve. Banks can't lend money they don't have unless they borrow it, and reckless money supply leads to bubbles like these, as well as inflation, which isn't going away anytime soon.
2008-01-30 15:21:07
mikeyb118
Evil Overlord
+76|6608|S.C.

KEN-JENNINGS wrote:

dark110 wrote:

For all of you people who think you unerstand economics, allow me to explain.

First off, a recession is having two straight quarters of reduced Gross Domestic Product or Real Income Growth. While I think the 1st Q of 2008 may be slower than Q4 2007, I think the economy will recover and show growth by Q2 of 2008 thus keeping us out of a recession by definition.
That makes you sound like an idiot.  While that is the dictionary definition of a recession, virtually no economist uses that defnition in describing a recession.

You really didn't explain anything, you just speculated.  Not that I agree or disagree with what your saying...
My teacher uses that definition but he's a Communist, no rly he is banned from the USA.

On to the OP, there are critical problems that both the British and American economy share. First on the order is sub-prime and easy credit in general. Economists forget that stupid people will buy buy buy with no regard or little consideration for long term repayment, when the growth stops and jobs need to go the borrowers are compromised even further. The next issue is budget deficit, this is buy buy buy on the national scale. Now China and the ME hold our debts and when the Economy turns we still have to pay the interest... nicht so gut!
Now I just took some Phenergan so good night.
2008-01-30 15:25:35
KEN-JENNINGS
I am all that is MOD!
+2,973|6642|949

The Business Cycle Dating Committee at the National Bureau of Economic Research (NBER) provides a better way to find out if there is a recession is taking place. This committee determines the amount of business activity in the economy by looking at things like employment, industrial production, real income and wholesale-retail sales. They define a recession as the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out. When the business activity starts to rise again it’s called an expansionary period. By this definition, the average recession lasts about a year.

NBER website

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades.
I was unaware the USA banned people for being communist.  I guess the Communist Party here doesn't really exist

Last edited by KEN-JENNINGS (2008-01-30 15:27:34)

 

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