[LordOpie]

Even if the Fed drops rates this week by 0.25%, we're still looking at a slow down. And the Federal Reserve insight is, they don't believe it's their job to manage or fix the economy, unlike Alan Greenspan, former Fed chief.

As such, they're not likely to drop rates at all.

I think a 0.5% drop would be necessary to fend off a recession.


Regardless of what they do, we're looking at an economic slowdown for at least five years. If they drop rates to fend off a recession -- NECESSARY -- then we're looking at increased inflation. If they don't drop rates, then there will be a lot of people losing jobs.

 

[Secret Squirrel]

That's cause Greenspan actually had a f*ckin' clue...

 

[Echo]

I'll acknowledge a recession when I get my pinkslip

 

[rockwool]

Wasn't Greenspan head of the worldbank aswell a year or so back?

 

[LordOpie]

That's cause Greenspan actually had a f*ckin' clue...

agreed.

I'll acknowledge a recession when I get my pinkslip

I'm serious bro. Three months from now for the next five years will be a horrible job market. Change jobs now or do whatever you can to keep the one you have.

 

[MMike]

Heed the jew!!! He knows!!

 

[Echo]

I'm serious bro. Three months from now for the next five years will be a horrible job market. Change jobs now or do whatever you can to keep the one you have.

Definitely... I really wanna get my house paid off while I have this job because I doubt there's many other places around here that will pay me this much. Once my hizzy is paid for I don't need to make nearly as much money to live.

 

[SkaredShtles]

 

[LordOpie]

Heed the jew!!! He knows!!

When you're thirsty, do you not follow the camel?

Definitely... I really wanna get my house paid off while I have this job because I doubt there's many other places around here that will pay me this much. Once my hizzy is paid for I don't need to make nearly as much money to live.

good plan.

...

And what makes you think the economy is sound and recession-proof?

 

[SkaredShtles]

<snip>
And what makes you think the economy is sound and recession-proof?

It's not recession proof. Just come back to me in 5 years and let's compare notes...

I'd say a recession in the short term would be good for my prospects of getting a nice little pad in the mountains.

 

[LordOpie]

It's not recession proof. Just come back to me in 5 years and let's compare notes...

So you're not concerned about:

-- housing market dumping
-- falling consumer confidence
-- consumer savings rate's continued downward trend and lowest ever
-- continued weakening of the US Dollar
-- Federal Reserve unlikely to lower rates
-- Fed Govt's deficit out of control
-- inflation outpacing growth


To me, this adds up to a govt that is unable and unwilling to do anything about the economic outlook. Business slowing their spending. Consumers spending less. Consumers earning less.

This is the type of vicious cycle that was avoided when Greenspan was in charge of the amount of money in circulation and spending under control by the congress and PotUS.

Where is the money going to come from?

 

[SkaredShtles]

So you're not concerned about:

Not particularly.

You're just getting your panties in a wad because you're about to be a new dad.

 

[LordOpie]

Not particularly.

Ah, right, the old head-in-the-sand ploy.

Excellent.

 

[SkaredShtles]

Ah, right, the old head-in-the-sand ploy.

Excellent.

No head in the sand. If we have a 5 year recession let's just say that I'm plenty well prepared. Which allows me the luxury of not getting my panties in a wad over this Chicken Little nonsense.

Like I said - come back in 5 years and let's compare notes.

Are all your investments in cash right now?

 

[skatetokil]

If it was just a recession I would be ecstatic. The problem is our political system seems unable to confront the fundamental insanity of its tax/subsidy structure, regulatory approach, and growth model. This is not a problem that can be solved by low interest rates, though they might dull the edge of what's to come. This is not (primarily) the Fed's fault, though the housing bubble may be to future generations what the '29 stock market crash is to us. Bad regulations, loose credit, and financial mercenaries contributed to both events, but such "crashes" are just the most visible and dramatic examples of a contraction.

In the sense that crises tend to reacquaint the politicians with reality, the present reckoning could be good for America, but only if we can keep the usual special interest suspects from putting their dicks in the proverbial mashed potatoes when it comes time for reform and recovery.

 

[Silver]

http://www.slate.com/id/2096313/

Greenspan isn't a god. Competent, but he still made mistakes.

 

[Westy]

Clinton really ****ed things up.

 

[jimmydean]

I now make 92% of what I made in 2000 and it only cost me $35k in student loans to get my income back to that level. At least with this job, my carer is "at the next level" so if something was to happen, the bar is well raised at this point.

 

[SkaredShtles]

Clinton really ****ed things up.

 

[LordOpie]

In the sense that crises tend to reacquaint the politicians with reality, the present reckoning could be good for America, but only if we can keep the usual special interest suspects from putting their dicks in the proverbial mashed potatoes when it comes time for reform and recovery.

I hear ya, but the problem is, we cycle politicians in-and-out of office. While there is serious benefit to that, the political system has short-term memory.

Which is why I advocate -- not that my word means anything -- a Federal Reserve "solution".

The next PotUS will have his job cut out in balancing the budget and getting that part of the economy under control, but any "long-term" solution is destined to be destroyed by self-interest of the ruling parties at the time and a failure to implement a short-term solution now means many families will be devastated by the upcoming lay-offs.

 

[Westy]

Luckily the economy has been so good we can just do a little deficit spending for a little while to get things back on track. Oh wait...

 

[LordOpie]

Luckily the economy has been so good we can just do a little deficit spending for a little while to get things back on track. Oh wait...

Exactly

 

[stevew]

Luckily the economy has been so good we can just do a little deficit spending for a little while to get things back on track. Oh wait...

How about a new and exciting war?

 

[skatetokil]

If only war were still a profitable enterprise for us we might not be in this mess, but even our government's warmaking apparatus is all screwed up.

 

[skatetokil]

So, what are the pros and cons of a very weak dollar in your mind?

 

[Westy]

So, what are the pros and cons of a very weak dollar in your mind?

Biggest Con: A further weakening dollar might cause a selloff of US bonds. With a huge national debt being held by foreign governments a little country like South Korea could sell off and flood the market of their US bonds causing a panicked sell off. This would cause the dollar to spiral out of control, bankrupting the US and most likely the international economy.

 

[SkaredShtles]

Biggest Con: A further weakening dollar might cause a selloff of US bonds. With a huge national debt being held by foreign governments a little country like South Korea could sell off and flood the market of their US bonds causing a panicked sell off. This would cause the dollar to spiral out of control, bankrupting the US and most likely the international economy.

I remember this scenario being discussed back in the mid- to late-80's. Maybe this time it'll happen. Furrin gubmints do seem to be awfully optimistic, IMO, about the US government.

 

[narlus]

If only war were still a profitable enterprise for us we might not be in this mess, but even our government's warmaking apparatus is all screwed up.

war still is a profitable enterprise for them

 

[LordOpie]

So, what are the pros and cons of a very weak dollar in your mind?

Actually, a weak dollar does have some benefit.

If it's more profitable to produce goods in the US, then we can start balancing the trade deficit. Unfortunately, the dollar would have to drop a significant amount. At least people would be more encouraged to buy locally with a weaker dollar as well as the scares from unmanaged overseas production, eg. China poisoning kids.

Maybe tech support will be brought back home?

Thing is, those are medium- to long-term positives.

In the short term, a weak dollar means a form of inflation. Sh1t will just cost more, people will spend less.

 

[Westy]

I remember this scenario being discussed back in the mid- to late-80's. Maybe this time it'll happen. Furrin gubmints do seem to be awfully optimistic, IMO, about the US government.

It almost happened a few years ago. I can't remember the details but I think the South Korean Gov. was simply thinking about unloading US bonds in favor of more profitable ones. That alone would have devaluated the dollar enough that it could have caused a panic sell off from other countries caousing chaos. It took a diplomatic envoy to convince them not to do it.

The reality of it all is that there are several countries that could bring us to our knees with no military action. The only thing that prevents it is most other countries economy rely on ours also doing well so it is kind of like a financial mutually assured destruction.

 

[Westy]

Actually, a weak dollar does have some benefit.

If it's more profitable to produce goods in the US, then we can start balancing the trade deficit. Unfortunately, the dollar would have to drop a significant amount. At least people would be more encouraged to buy locally with a weaker dollar as well as the scares from unmanaged overseas production, eg. China poisoning kids.

Maybe tech support will be brought back home?

Thing is, those are medium- to long-term positives.

In the short term, a weak dollar means a form of inflation. Sh1t will just cost more, people will spend less.

It is good if you owe a lot of money. Not so good if you have saved/loaned money.

 

[SkaredShtles]

It almost happened a few years ago. I can't remember the details but I think the South Korean Gov. was simply thinking about unloading US bonds in favor of more profitable ones. That alone would have devaluated the dollar enough that it could have caused a panic sell off from other countries caousing chaos. It took a diplomatic envoy to convince them not to do it.

The reality of it all is that there are several countries that could bring us to our knees with no military action. The only thing that prevents it is most other countries economy rely on ours also doing well so it is kind of like a financial mutually assured destruction.

Bingo. Which pretty much keeps everybody on an even keel. What might tip the scale is if one of those countries goes into a spiral and sells off figuring things couldn't get any worse.

Of course, the gubmint could always just default on the notes and tell those countries to pound sand. Which entails its own set of nasty outcomes.

 

[SkaredShtles]

It is good if you owe a lot of money. Not so good if you have saved/loaned money.

Which would mean good things for 98% of the US population! Disaster averted.

 

[Changleen]

Heed the jew!!! He knows!!

Edit: Actually, I don't have a clue about the US economy right now. But what MMike says ain't normally wrong! lol

What I'm wondering is if this is a good or bad thing for the dinghy-in-a-hurricane that is the NZ$..

 

[FlyinPolack]

Outsourcing to 3rd world countries is the current economy killer.
build factories in China=Close factories in US=Layoff thousands of US workers=thousands of US forclosures.

Stop buying Chinese crap. You are paying for the army that will someday come & kill us. Literally...

 

[valve bouncer]

Outsourcing to 3rd world countries is the current economy killer.
build factories in China=Close factories in US=Layoff thousands of US workers=thousands of US forclosures.

Stop buying Chinese crap. You are paying for the army that will someday come & kill us. Literally...

Good luck trying to ignore China. Do us a favour and go and check where the computer you typed this exenophobic rant on is made? Bet it's China. Bet you've got at least a hundred things in your house made there. Attitudes like yours are destined to result in a spectacular Canutian failure.

 

[Westy]

Outsourcing to 3rd world countries is the current economy killer.
build factories in China=Close factories in US=Layoff thousands of US workers=thousands of US forclosures.

Stop buying Chinese crap. You are paying for the army that will someday come & kill us. Literally...

See above posts. China does not need an army to make the US fold like a deck of cards. But a military or financial war is unlikely as their prosperity and well being is tied directly to ours.

Those forclosures you are talking about has less to do with Americans losing their jobs as dumb asses taking out risky loans and mortgage companies rolling the dice on the real estate market.

 

[Westy]

Just some numbers to back up what I said above.

From Wikipedia.

The People's Republic of China holds the most U.S. debt, ending the first quarter of 2007 with over $1.2 trillion in total foreign reserves, of which about $420.2 billion are U.S. Treasury securities.[

 

[Spero]

See above posts. China does not need an army to make the US fold like a deck of cards. But a military or financial war is unlikely as their prosperity and well being is tied directly to ours.

Those forclosures you are talking about has less to do with Americans losing their jobs as dumb asses taking out risky loans and mortgage companies rolling the dice on the real estate market.

The general population has, for the most part, been pretty irresponsible with credit for a while now. Yeah, more so now than in the past, but i don't believe that's the majority of the meat of the problem. I'll stick to blaming the lenders...and their employees will most likely agree with that sentiment.

Edit: My 2 cents on the original post - I don't know why it should be a surprise to anyone...it wasn't hard to see this coming a year and a half ago.

 

[ire]

The general population has, for the most part, been pretty irresponsible with credit for a while now.

I'm reading a good book right now talking about this...the theory is that our (the U.S.) consumer market has reached its max ability to buy goods, becuase everyone is in debt. Its not that we won't continue to buy, but it will cause a slow down across the board from the aggressive growth we've seen in the economy (causing at a slow down, if not recession with the other woes). I would state more, but I'm not done with the book

The book is "Capitalism at the Crossroads"