We are very likely in another depression

[glenn1]

Good. I'm looking forward to picking up some bargains from those who lived above their means for years. I'm not terribly sad either that the worst affected will be places like NYC, now deprived of the tax revenues of thousands of former "masters of the universe" who will never again come close to matching how they did in their investment banking days.

 

[BarneyFife]

Originally posted by: glenn1
Good. I'm looking forward to picking up some bargains from those who lived above their means for years. I'm not terribly sad either that the worst affected will be places like NYC, now deprived of the tax revenues of thousands of former "masters of the universe" who will never again come close to matching how they did in their investment banking days.

I'm sure you'll pick up a lot of bargains when you lose your job and all of your savings through this collapse. I hope you have gold handy.

 

[nullzero]

We are now in a negative feedback loop in the economy that is impossible to stop. Our economy is based on over 70% consumer spending... Consumer spending is declining because of job losses. Declining consumer spending= more job losses. Job losses then turn into more job losses. I would not write off 20% unemployment impossible by the end of this year. This economy is evaporating before our eyes.

 

[DisgruntledVirus]

Still having a job +1

 

[glenn1]

Originally posted by: BarneyFife

Originally posted by: glenn1
Good. I'm looking forward to picking up some bargains from those who lived above their means for years. I'm not terribly sad either that the worst affected will be places like NYC, now deprived of the tax revenues of thousands of former "masters of the universe" who will never again come close to matching how they did in their investment banking days.

I'm sure you'll pick up a lot of bargains when you lose your job and all of your savings through this collapse. I hope you have gold handy.

You can bet on the Mad Max scenario if you like; but even if this gets as bad as the Great Depression, I'll bet on me being one of the 80% of folks who stayed employed like then. Of course, if you live somewhere like Detroit you're pretty much fvcked, but that's how it goes.

 

[BoberFett]

Originally posted by: glenn1

Originally posted by: BarneyFife

Originally posted by: glenn1
Good. I'm looking forward to picking up some bargains from those who lived above their means for years. I'm not terribly sad either that the worst affected will be places like NYC, now deprived of the tax revenues of thousands of former "masters of the universe" who will never again come close to matching how they did in their investment banking days.

I'm sure you'll pick up a lot of bargains when you lose your job and all of your savings through this collapse. I hope you have gold handy.

You can bet on the Mad Max scenario if you like; but even if this gets as bad as the Great Depression, I'll bet on me being one of the 80% of folks who stayed employed like then. Of course, if you live somewhere like Detroit you're pretty much fvcked, but that's how it goes.

I'm about to buy a house because I figure either way I win. I'm pretty resourceful and always find a way to get by. A down economy is a good time for resourceful people to get ahead. And if it does go Mad Max, then it's just a matter of having enough guns and ammo to protect me and my loved ones. And I've got a lot of that.

 

[manowar821]

It's pretty hilarious when you think about it. Hahahaha.

 

[Eeezee]

Yeah, probably, but I'm in education so I'll make it through okay. In tough economic times enrollment rates tend to increase as more people go back to school.

 

[WhipperSnapper]

Originally posted by: FarangI don't understand. You never had debt except for your house, and also you didn't have family helping you out? So what does that mean, you had savings? I just graduated college I have no savings. I'm really just $100 or so in the red, mostly because I shelled out hundreds of dollars on various tests and fees to give me the option of applying to grad school. So if you are railing against debt don't look at me I think most of mine is justifiable, I eat oatmeal for dinner and study for the LSATs all day

You're gonna love law school loan debt, love it! Did you know that the law schools are pumping out two or three times more new attorneys than what the legal job market can handle and there's a huge oversupply in the field and that even a great many employed attorneys are miserable as a result?

For a good time visit:

http://www.EndofEsq.com
http://jdunderground.com/forum.php

 

[WhipperSnapper]

Originally posted by: nullzero
We are now in a negative feedback loop in the economy that is impossible to stop. Our economy is based on over 70% consumer spending... Consumer spending is declining because of job losses. Declining consumer spending= more job losses. Job losses then turn into more job losses. I would not write off 20% unemployment impossible by the end of this year. This economy is evaporating before our eyes.

We're going to discover that our credit and debt-based consumer economy is hollow. Since we sent actual wealth production either overseas or imported foreigners to dot he work, as a nation we no longer have a basis for having wealth.

We sent our manufacturing jobs to Southeast Asia and Mexico. Then we sent many knowledge-based college-education-requiring jobs to India. In the meantime we also imported hundreds of thousands of foreigners to take knowledge-based jobs using H-1B and L-1 visas.

Then we allowed millions of illegal aliens to invade and depress wages in the construction and meatpacking fields as well as in other areas. In 1965 we also dramatically increased the amount of legal immigration. Consequently, now we have lots of poor people who consume more tax revenue's worth of government services (health care, education) than they produce. (Got tens of millions of poor people in your country? Politicians' solution--import more poor people!)

Until us American morons wake up and grow up and face economic reality and develop a sense of national selfish interest, we'll just continue to merge our economy and standard of living with that of the third world.

Global Labor Arbitrage -- Foreign Outsourcing -- H-1B and L-1 visas -- Mass Immigration -- Are you ready to join the third world?

 

[WhipperSnapper]

Originally posted by: glenn1You can bet on the Mad Max scenario if you like; but even if this gets as bad as the Great Depression, I'll bet on me being one of the 80% of folks who stayed employed like then. Of course, if you live somewhere like Detroit you're pretty much fvcked, but that's how it goes.

It's not as though 80% of the labor force will be fine and dandy in their jobs. A great many people will also suffer from having fewer work hours and possibly wage and especially benefit cuts. Even a great many people who are "happily" employed will be negatively affected.

 

[WhipperSnapper]

Originally posted by: BoberFettI'm about to buy a house because I figure either way I win. I'm pretty resourceful and always find a way to get by. A down economy is a good time for resourceful people to get ahead. And if it does go Mad Max, then it's just a matter of having enough guns and ammo to protect me and my loved ones. And I've got a lot of that.

Are you sure you don't want to wait for the prices to drop? If I had bought a property last summer I'd be fucked right now. At least in my area houses and condos have lost a significant amount of value in the past couple months and I think the downward trend will continue.

 

[WhipperSnapper]

Originally posted by: Eeezee
Yeah, probably, but I'm in education so I'll make it through okay. In tough economic times enrollment rates tend to increase as more people go back to school.

I tend to agree. However, I wonder what would happen if people started defaulting on their student loans in mass in record numbers. Would lenders still want to lend money for increasingly expensive college education that has decreasing value? I'd love it if a bunch of excess colleges and universities either closed down or cut programs that overproduce graduates for already glutted fields.

 

[StageLeft]

Originally posted by: Farang
That is a good point. Right now I am in the red and still live comfortably because I have family's couches to sleep on and credit lines to keep me going another 6-12 months. If this were 1928, and assuming credit wasn't as easily accessible back then, I would be absolutely broke. Then all it would take is me not to have family to stay with and you'd see a college grad standing in a bread line here.

Historically college grads are much less suceptible to unemployment, so if lots of college grads are in bread lines the blue collar people will be eating scraps from that bread line's table.

Anyway, as I mentioned above, I hope your "credit lines" are not credit cards, because what bank of america giveth bank of america can take away. Many with resplendent credit have seen their rates raised for no apparent reason with some lenders. I used to think a credit card was a good backup, too, but it truly is not.

I sometimes wonder if being able to live with family or friends makes it an easier option for people to fall on this..

For some, absolutely.

I'm really just $100 or so in the red

$100 isn't even money.

 

[StageLeft]

Like whipper, I think houses will continue to decline. There's no way around it. The only reason to buy now is if you feel interest rates won't stay low, but houses, oh yes don't you worry they will continue to lose value.

I don't think student loan defaults are a huge problem short term as people don't really default on them while getting the education, so education does remain a strong area.

The US' manufacturing is weak but has been weakening for a very, very long time. It is heavy on consumer and services but it won't be third world any time soon. They key differences between the US and any third world country are culture, political system, resources, and most importantly infrastructure (which is very advanced and expensive for any country to build) and education. Overall I'm quite sure the "standard of living" will be lower in a decade than it is now, but it's such a hard thing to qualify anyway as I feel technology can greatly hide so called decreases in the sol.

 

[0marTheZealot]

GDP shrunk by 3.8% in the 4th quarter.
http://www.msnbc.msn.com/id/28930809/

The American economy has been nothing but a giant bubble for the last 20 years. I wouldn't be surprised if this recession lasts 2-3 years. I mean, how exactly is the economy supposed to recover when it's the fundamentals that are whacked? Easy credit will probably never be available again, you will actually have to earn the right to access credit once again. Consumer spending has likely hit a peak in history. I really don't see how we can recover and enter a sustainable growth economy with the old paradigm, which is what everyone seems to be trying to resurrect.

 

[StageLeft]

Originally posted by: 0marTheZealot
GDP shrunk by 3.8% in the 4th quarter.
http://www.msnbc.msn.com/id/28930809/

The American economy has been nothing but a giant bubble for the last 20 years. I wouldn't be surprised if this recession lasts 2-3 years. I mean, how exactly is the economy supposed to recover when it's the fundamentals that are whacked? Easy credit will probably never be available again, you will actually have to earn the right to access credit once again. Consumer spending has likely hit a peak in history. I really don't see how we can recover and enter a sustainable growth economy with the old paradigm, which is what everyone seems to be trying to resurrect.

It makes sense. I think after this recession credit will be tighter but people won't even want it as much anyway. Savings in this country have been pitiful and really the economy was a bubble. Still is.

 

[LegendKiller]

Originally posted by: Skoorb

Originally posted by: 0marTheZealot
GDP shrunk by 3.8% in the 4th quarter.
http://www.msnbc.msn.com/id/28930809/

The American economy has been nothing but a giant bubble for the last 20 years. I wouldn't be surprised if this recession lasts 2-3 years. I mean, how exactly is the economy supposed to recover when it's the fundamentals that are whacked? Easy credit will probably never be available again, you will actually have to earn the right to access credit once again. Consumer spending has likely hit a peak in history. I really don't see how we can recover and enter a sustainable growth economy with the old paradigm, which is what everyone seems to be trying to resurrect.

It makes sense. I think after this recession credit will be tighter but people won't even want it as much anyway. Savings in this country have been pitiful and really the economy was a bubble. Still is.

The savings rate has skyrocketed while debt has shrunk. The numbers look pretty promising.

 

[Vic]

Good article.

 

[MovingTarget]

Originally posted by: BoberFett

Originally posted by: MovingTarget
Well, it is possible. For quite a while the middle class had been saying that it "felt" like we were in a recession, while the resident free-marketers kept citing the stock market to say that things were just dandy. The very same is likely to be happening now.

Aside from the official definition of "depression", what would the the signs that this is going on to the average person? I don't think we can compare a modern-day depression to ones of the past simply because of the way society, government, and infrastructure have changed. How would we know?

Yeah revisionism!

Free marketeers haven't been saying any such things. It's the LegendKillers and Evans of this forum who have been saying everything is fine. They denounce the free market fervently.

Lies and deceit, typical leftist.

Do you remember when the dow was still above 10k when the economists in the media were saying that things were fine? That we were still growing? I do. Many average Americans had been feeling the squeeze LONG before now. Wages had been stagnant, debt was mounting, prices rising, and many couldn't keep up anymore. Yet, the talking heads kept saying that since GDP was growing and the stock market was still doing well that the rest of America had been doing well. This clearly wasn't the case.

What about 14k? The middle class has been experiencing this downturn before the insulated wall street fatcats caught wind of it. I don't denounce the free market when it works like it is supposed to, but I do denounce the leaders of the free market (and their parrots) when they are completely divorced from reality. We are now seeing the effects of that. Leftist? Hardly. Experience trumps idealogy in this case...

 

[BoberFett]

Originally posted by: MovingTarget

Originally posted by: BoberFett

Originally posted by: MovingTarget
Well, it is possible. For quite a while the middle class had been saying that it "felt" like we were in a recession, while the resident free-marketers kept citing the stock market to say that things were just dandy. The very same is likely to be happening now.

Aside from the official definition of "depression", what would the the signs that this is going on to the average person? I don't think we can compare a modern-day depression to ones of the past simply because of the way society, government, and infrastructure have changed. How would we know?

Yeah revisionism!

Free marketeers haven't been saying any such things. It's the LegendKillers and Evans of this forum who have been saying everything is fine. They denounce the free market fervently.

Lies and deceit, typical leftist.

Do you remember when the dow was still above 10k when the economists in the media were saying that things were fine? That we were still growing? I do. Many average Americans had been feeling the squeeze LONG before now. Wages had been stagnant, debt was mounting, prices rising, and many couldn't keep up anymore. Yet, the talking heads kept saying that since GDP was growing and the stock market was still doing well that the rest of America had been doing well. This clearly wasn't the case.

What about 14k? The middle class has been experiencing this downturn before the insulated wall street fatcats caught wind of it. I don't denounce the free market when it works like it is supposed to, but I do denounce the leaders of the free market (and their parrots) when they are completely divorced from reality. We are now seeing the effects of that. Leftist? Hardly. Experience trumps idealogy in this case...

That thing that just flew over your head? That was the point. Too bad you missed it.

The free market was in no way responsible for the stock market bubble and its irrational exuberance. That was due to market intervention by the government. The opposite of free market.

Unless you can show me how in a free market a bank could lend more money than it has, I'm going to stick with Not A Free Market Problem.

 

[GTKeeper]

Originally posted by: BoberFett

Originally posted by: MovingTarget

Originally posted by: BoberFett

Originally posted by: MovingTarget
Well, it is possible. For quite a while the middle class had been saying that it "felt" like we were in a recession, while the resident free-marketers kept citing the stock market to say that things were just dandy. The very same is likely to be happening now.

Aside from the official definition of "depression", what would the the signs that this is going on to the average person? I don't think we can compare a modern-day depression to ones of the past simply because of the way society, government, and infrastructure have changed. How would we know?

Yeah revisionism!

Free marketeers haven't been saying any such things. It's the LegendKillers and Evans of this forum who have been saying everything is fine. They denounce the free market fervently.

Lies and deceit, typical leftist.

Do you remember when the dow was still above 10k when the economists in the media were saying that things were fine? That we were still growing? I do. Many average Americans had been feeling the squeeze LONG before now. Wages had been stagnant, debt was mounting, prices rising, and many couldn't keep up anymore. Yet, the talking heads kept saying that since GDP was growing and the stock market was still doing well that the rest of America had been doing well. This clearly wasn't the case.

What about 14k? The middle class has been experiencing this downturn before the insulated wall street fatcats caught wind of it. I don't denounce the free market when it works like it is supposed to, but I do denounce the leaders of the free market (and their parrots) when they are completely divorced from reality. We are now seeing the effects of that. Leftist? Hardly. Experience trumps idealogy in this case...

That thing that just flew over your head? That was the point. Too bad you missed it.

The free market was in no way responsible for the stock market bubble and its irrational exuberance. That was due to market intervention by the government. The opposite of free market.

Unless you can show me how in a free market a bank could lend more money than it has, I'm going to stick with Not A Free Market Problem.

Give me a fucking break.

The 1987 crisis, the 1998 crisis and today's crisis can all be attributed to complex financial instruments, i.e Derivatives and more specifically off-balance sheet exposures. That is about as 'free market' as it gets since its unregulated at all.

What are people's thoughts on US banks being essentially insolvent at this point?

 

[ProfJohn]

Even with all the bad recent news the economy is about the same shape it was in 1982. That recession was the last 'bad' recession that we faced, but it was nothing compared to the late 70s era.

When we hit bottom it may look like a 70s era recession, but that is a LONG LONG ways from a depression. When unemployment doubles then we can start talking about a recession.

 

[ProfJohn]

Originally posted by: LegendKiller

Originally posted by: Skoorb

Originally posted by: 0marTheZealot
GDP shrunk by 3.8% in the 4th quarter.
http://www.msnbc.msn.com/id/28930809/

The American economy has been nothing but a giant bubble for the last 20 years. I wouldn't be surprised if this recession lasts 2-3 years. I mean, how exactly is the economy supposed to recover when it's the fundamentals that are whacked? Easy credit will probably never be available again, you will actually have to earn the right to access credit once again. Consumer spending has likely hit a peak in history. I really don't see how we can recover and enter a sustainable growth economy with the old paradigm, which is what everyone seems to be trying to resurrect.

It makes sense. I think after this recession credit will be tighter but people won't even want it as much anyway. Savings in this country have been pitiful and really the economy was a bubble. Still is.

The savings rate has skyrocketed while debt has shrunk. The numbers look pretty promising.

^ if true then we are setting ourselves up for a good recovery.

Right now everyone is sitting back and saving their pennies worried about their jobs, but once we start to recover they will go out and spending like mad and that will really give the economy a big jolt.
GDP growth by quarter
Look at the 1982-83 period.

Went from -1.5% to 0% to 5% to 8-9% for an entire year. That is an insane level of growth.

During Clinton's whole term he had only 5 quarters of growth over 6% and Bush only had 1 while Reagan had 5 at +7% in a row. If congress doesn't screw things up we could see a repeat in another year or two.

 

[Special K]

Originally posted by: nullzero
We are now in a negative feedback loop in the economy that is impossible to stop. Our economy is based on over 70% consumer spending... Consumer spending is declining because of job losses. Declining consumer spending= more job losses. Job losses then turn into more job losses. I would not write off 20% unemployment impossible by the end of this year. This economy is evaporating before our eyes.

Just a minor clarification - I keep reading over and over again that the economy is in a negative feedback loop, when in fact it is in a positive feedback loop. The terms "positive" and "negative" in the context of feedback have nothing to do with whether the behavior of the system is desirable or not.

In the case of positive feedback, an event that disturbs a system's initial state is amplified by the system, which lead to further disturbances, which are in turn amplified, which in turn lead to further disturbances, and so on.

In a negative feedback loop, the effects of an external event are attenuated in order to hold the system in its initial stable state.