We are very likely in another depression

[Budmantom]

Originally posted by: Skoorb
Looking more and more like it all the time. A definition of a depression is not hard and fast, but one I've heard floated when it was just an academic exercise with no real meaning to the real world (i.e. nobody thought we'd see one) was 10% drop in GDP occurring, I think. Not sure if that was for a year or whatever, but Japan is there now, as of Q4 last year, give or take a bit. Who knows how far down the US will go, but one thing's for sure we are all on a sinking ship.

We have learned everything that Japan has done and are well on out way to duplicate it step by step.

Go Abamanation

 

[StageLeft]

Originally posted by: Muse

Originally posted by: Elias824
When I see unemployment head over 10% ill start to worry about a depression. Here in my home state of Utah (Mormon jokes welcome) Were at a whopping 3.7% unemployment

We're very close to 10% here in CA and it's rising fast. Don't know any Mormon jokes. I've wondered for years how they can keep a straight face when they talk about recessions. This is the scariest yet because there's an undercurrent of panic. Yes, people are still driving. Could the bottom fall out of this economy? IMO, yes.

CA is probably there now but it's not official due to unemployment numbers lag. I think it was over 9 already in January and the bloodletting has continued since. CA is like the 5th or 7th biggest economy in the world, bigger than most countries and is of far more relevance than Utah.

 

[Zebo]

it's a lot higher than 9%, "discouraged workers" were defined away during the Clinton Administration! The government has been as irresponsible with their statistics and they have been with credit issuance. Last 10-15 years is all a mirage.

Take the blue pill

 

[wwswimming]

here are some graphs and charts to liven up the conversation.

world industrial production, percent change, 1997 to present

i think that first chart is quarter by quarter, the percent change is relative to
the previous quarter.


exports & imports, percent change, year over year


"European Bank Losses Dwarf Those in the US

In a few paragraphs I am going to put up a chart from Nouriel Roubini's RGE Monitor on the size of US bank losses, and in a few pages I'll comment on the Geithner "plan" for rescuing US banks. We have indeed dug ourselves a very deep hole here in the US.

But European banks may be in far worse shape. Bruno Waterfield of the London Daily Telegraph reports to have seen an eyes-only document prepared by the European Commission for the finance ministers of the various EU member countries. The problem revealed in the report is an estimated write-down by European banks in the range of 16 trillion pounds, or about $25 trillion dollars! The concern is that bailing out the various national banks for such an unbelievable amount would push the cost of government borrowing to much higher levels than we see today.

As my kids would say, "Really, Dad, you think so?" Europe is somewhat larger than the US, so think what my gold-bug friends would say if the US decided to borrow $25 trillion to bail out US banks. The dollar would be crucified! The euro is going to get a lot weaker if bank problems are even half of what the report says they are. The British pound sterling is already off almost 30% and, depending on what the real damage is to their banking system, it could get worse."


from John Mauldin at
http://www.investorsinsight.com/

 

[LegendKiller]

Originally posted by: wwswimming
here are some graphs and charts to liven up the conversation.

world industrial production, percent change, 1997 to present

i think that first chart is quarter by quarter, the percent change is relative to
the previous quarter.


exports & imports, percent change, year over year


"European Bank Losses Dwarf Those in the US

In a few paragraphs I am going to put up a chart from Nouriel Roubini's RGE Monitor on the size of US bank losses, and in a few pages I'll comment on the Geithner "plan" for rescuing US banks. We have indeed dug ourselves a very deep hole here in the US.

But European banks may be in far worse shape. Bruno Waterfield of the London Daily Telegraph reports to have seen an eyes-only document prepared by the European Commission for the finance ministers of the various EU member countries. The problem revealed in the report is an estimated write-down by European banks in the range of 16 trillion pounds, or about $25 trillion dollars! The concern is that bailing out the various national banks for such an unbelievable amount would push the cost of government borrowing to much higher levels than we see today.

As my kids would say, "Really, Dad, you think so?" Europe is somewhat larger than the US, so think what my gold-bug friends would say if the US decided to borrow $25 trillion to bail out US banks. The dollar would be crucified! The euro is going to get a lot weaker if bank problems are even half of what the report says they are. The British pound sterling is already off almost 30% and, depending on what the real damage is to their banking system, it could get worse."


from John Mauldin at
http://www.investorsinsight.com/

25TR? I call bullshit on that one. I don't even think all of the Euro banks have 25TR in assets, combined. Even if they did that'd be akin to saying that ALL assets with 100% loss and 100% loss severity. Let's say that they experience 50% losses on all assets and 50% loss severity on those assets, then that'd mean that the Euro banks have $100TR on their balance sheets. That is simply impossible.

Europe has a lot less consumer and commercial debt than we do, with the exception of the UK, they got into a lot of CCs and mortgages. All other countries have far lower borrowing rates than the US does. Most people buy their houses with cash and never have even owned a CC.

 

[StageLeft]

Originally posted by: wwswimming
here are some graphs and charts to liven up the conversation.

world industrial production, percent change, 1997 to present

i think that first chart is quarter by quarter, the percent change is relative to
the previous quarter.


exports & imports, percent change, year over year


"European Bank Losses Dwarf Those in the US

In a few paragraphs I am going to put up a chart from Nouriel Roubini's RGE Monitor on the size of US bank losses, and in a few pages I'll comment on the Geithner "plan" for rescuing US banks. We have indeed dug ourselves a very deep hole here in the US.

But European banks may be in far worse shape. Bruno Waterfield of the London Daily Telegraph reports to have seen an eyes-only document prepared by the European Commission for the finance ministers of the various EU member countries. The problem revealed in the report is an estimated write-down by European banks in the range of 16 trillion pounds, or about $25 trillion dollars! The concern is that bailing out the various national banks for such an unbelievable amount would push the cost of government borrowing to much higher levels than we see today.

As my kids would say, "Really, Dad, you think so?" Europe is somewhat larger than the US, so think what my gold-bug friends would say if the US decided to borrow $25 trillion to bail out US banks. The dollar would be crucified! The euro is going to get a lot weaker if bank problems are even half of what the report says they are. The British pound sterling is already off almost 30% and, depending on what the real damage is to their banking system, it could get worse."


from John Mauldin at
http://www.investorsinsight.com/

The ship is sinking. Some of us made it to life rafts, but it still sucks, others have life jackets and are floating around, and others don't have a raft or life jacket!

 

[Oric]

Originally posted by: JSt0rm01

Originally posted by: dphantom
Nope, only DVD's I already have. I bought 1 $5.99 DVD movie 3 weeks ago.

And buying nothing means buying only essentials - utilities, food, house, mortgage. Don't go anywhere, drive minimally, no luxuries, nice to haves, etc...

Do me a favor and go to the movies please!

do me a favor and upgrade your pc !!

 

[smack Down]

Originally posted by: MovingTarget

Originally posted by: BoberFett

Originally posted by: GTKeeper

Originally posted by: MovingTarget

Originally posted by: BoberFett

Originally posted by: GTKeeper
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?

Complex financial instruments that can only exist in a fractional reserve banking system set up by... say it with me... government.

Talk about the point going over one's head. The government didn't mandate that people deal with these instruments. They were created by the financial institutions and not given any oversight by the government. They turned a blind eye.

As far as the fractional reserve system goes, even though it is set up by the government, that doesn't mean that it is the one at fault. Even before that system was set in place, you still had banks doing business on their own fractional reserve systems without any oversight, just like these complex financial instruments. The fractional reserve lending model had its roots, like most modern banking and accounting principles, outside of government. Hence, why you used to have runs on banks that people thought were unsound. History has had many examples of runs on banks for as long as we have had them irrespective of the governments.

This is what banks DO. They take deposits and then lend them out to try and make a profit. Nothing was stopping them from borrowing from elsewhere to lend out more than they physically had in bank notes, or whatever. Anyone who knows how the modern banking system developed would know this is the case. The gvt did step in later and regulate these practices, even encouraging them within certain limits, which both promoted growth and somewhat limited the damage a default would cause (see FDIC, etc.).

Perhaps you would like to go to a true free market where you had dramatic cycles every few years of booms, busts, panics, etc. without having any long-term stability OR growth. A true free market, i.e. Laissez-faire capitalism, has proven to be a disaster time and time again. You have to have oversight and regulation. If you do not see that, then you are delusional about both the government and the markets.

You nailed it. I love all these free market ideologues. They are all pretty fucking stupid.

Yeah, we're just stupid. It takes a genius like you to believe that one government driven bubble after another is more healthy than a regular cyclical economy.

How is your 401k doing? Pretty healthy? You can thank the government and it's beloved Federal Reserve for creating a neverending bubble. Well, until it popped anyway.

Do you like being able to put your money in a bank and have a steady yield with relatively little risk? Do you like knowing that it will still be there in the next four years as there are protections against the bank runs of old? If not, I bet your mattress is pretty lumpy with Benjamins. A neverending bubble is much preferable than the kind of economic booms/busts of the 19th century. We have already tried the unregulated free market economy. It was an unmitigated disaster over the long run. We shouldn't be taking steps backward. The Fed may be faulty, but not having it would be a real mistake at this point...

So we need the fed, because if we didn't have the fed there would be no one to clean up the mess the fed made?

 

[LegendKiller]

Originally posted by: smack Down
So we need the fed, because if we didn't have the fed there would be no one to clean up the mess the fed made?

Blaming the Fed for the crime is like blaming the gun for the murder when the person was stabbed to death but the murderer held the victim at gunpoint.

 

[smack Down]

Originally posted by: LegendKiller

Originally posted by: smack Down
So we need the fed, because if we didn't have the fed there would be no one to clean up the mess the fed made?

Blaming the Fed for the crime is like blaming the gun for the murder when the person was stabbed to death but the murderer held the victim at gunpoint.

Not when the guy doing the stabbing is the same guy doing the gun manufacturing.

 

[Zebo]

What did the Fed have to do with anything?

Is people. Deadbeats, crooked thief bankers, get rich quick artists like flippers and CEOs, politicians who ignored old values like prudence and reasonable progressive taxes tp pay for wars of avarice, etc... all contributed to this mess. Going to be some hard lessons learned here, may take years, but we will come out culturally stronger and rich eventually. Nothing is forever.

 

[LegendKiller]

Originally posted by: smack Down

Originally posted by: LegendKiller

Originally posted by: smack Down
So we need the fed, because if we didn't have the fed there would be no one to clean up the mess the fed made?

Blaming the Fed for the crime is like blaming the gun for the murder when the person was stabbed to death but the murderer held the victim at gunpoint.

Not when the guy doing the stabbing is the same guy doing the gun manufacturing.

lol. Sure. The point was, the Fed is a tool wielded and was not responsible for it's use. Any tool can be misused. Not only that, it wasn't the only tool misused.

 

[charrison]

Originally posted by: Zebo
What did the Fed have to do with anything?

Is people. Deadbeats, crooked thief bankers, get rich quick artists like flippers and CEOs, politicians who ignored old values like prudence and reasonable progressive taxes tp pay for wars of avarice, etc... all contributed to this mess. Going to be some hard lessons learned here, may take years, but we will come out culturally stronger and rich eventually. Nothing is forever.

The fed, held interest rates too low for long. This was some of the fuel for the fire in the housing boom

 

[Ferocious]

I strongly recommend watching 'House of Cards' - the documentary on the credit crisis on CNBC.

I'm not a big fan of CNBC, but they did a good job on this.


There is an encore showing tonight at 9 pm EST on CNBC.

 

[soccerballtux]

Originally posted by: Zebo

Originally posted by: Elias824
When I see unemployment head over 10% ill start to worry about a depression. Here in my home state of Utah (Mormon jokes welcome) Were at a whopping 3.7% unemployment

Unemployment IS 17% if you use pre-1994 collection methodology when they stopped counting those looking for more than a year.

Please see Statistician John Williams' shadowstats.com for more info.

The thing with this is that we'll eventually see the faulty unemployment methodology for what it is, if it is indeed a lie.

Politicians may want it, but the people on wallstreet want the real truth. Real unemployment is not 17%; if it were you would see conditions much worse than now. 17% is not sustainable. 7% is.

 

[soccerballtux]

Originally posted by: Muse

Originally posted by: Elias824
When I see unemployment head over 10% ill start to worry about a depression. Here in my home state of Utah (Mormon jokes welcome) Were at a whopping 3.7% unemployment

We're very close to 10% here in CA and it's rising fast. Don't know any Mormon jokes. I've wondered for years how they can keep a straight face when they talk about recessions. This is the scariest yet because there's an undercurrent of panic. Yes, people are still driving. Could the bottom fall out of this economy? IMO, yes.

Have no worries! Your leftist run state will save all!

 

[StageLeft]

Originally posted by: Ferocious
I strongly recommend watching 'House of Cards' - the documentary on the credit crisis on CNBC.

I'm not a big fan of CNBC, but they did a good job on this.


There is an encore showing tonight at 9 pm EST on CNBC.

Thanks, will dvr it.

 

[Zebo]

We don't have cable/sat - trying to save every dime.. We have not eaten out for 5 months...cancelled kids cells , all unnecessary spending nixed etc

Anyway to DL it???

 

[soccerballtux]

Originally posted by: Zebo
We don't have cable/sat - trying to save every dime.. We have not eaten out for 5 months...cancelled kids cells , all unnecessary spending nixed etc

Anyway to DL it???

bittorrent

 

[little elvis]

Originally posted by: Ferocious
I strongly recommend watching 'House of Cards' - the documentary on the credit crisis on CNBC.

I'm not a big fan of CNBC, but they did a good job on this.


There is an encore showing tonight at 9 pm EST on CNBC.

It was enlightening... I just shake my head at all the greed, from the home owners/purchasers, to the mortgage lenders/brokers, to the banks, and the rating agencies... Absolutely disgusting.

 

[shadow9d9]

Originally posted by: little elvis

Originally posted by: Ferocious
I strongly recommend watching 'House of Cards' - the documentary on the credit crisis on CNBC.

I'm not a big fan of CNBC, but they did a good job on this.


There is an encore showing tonight at 9 pm EST on CNBC.

It was enlightening... I just shake my head at all the greed, from the home owners/purchasers, to the mortgage lenders/brokers, to the banks, and the rating agencies... Absolutely disgusting.

Well, the bankers go away with their millions upon millions in bonuses for fake short term profits that bankrupted their banks.

 

[Squisher]

Originally posted by: Elias824
When I see unemployment head over 10% ill start to worry about a depression. Here in my home state of Utah (Mormon jokes welcome) Were at a whopping 3.7% unemployment

It's 10.6% (12/08) here in Michigan.

I'm going to watch Big Love in a couple of minutes and tell the wife we're converting from atheism to Mormon.

 

[StageLeft]

Watching House of Cards now. Seems a bit kind of hand-holding and not terribly complex. I wonder if there is more, but I do think that mostly this is the gist of it based on what I've read to date.

Obviously nobody has sympathy for somebody who wantonly lied on their app, but there are others who were financially stable, really were at a point in their lives when it was responsible to buy a home, and they were all but forced to overpay just to get one because of what others had done to ramp them up. So, a $200k house was now $320k, so what were they going to do? The average joe is going to have a hard time predicting the housing bubble and how to play it so a guy with a decent enough job gets that 320k, and now in some areas of the country that have fallen as much as 50%, he's kind of screwed.

I have no ulterior motive with any empathy. I managed to make a very small bit of money on our first house and our second has been in a stable market. It is a sh*ty situation, though for many. I still put the majority of the blame honestly on those who are professionals and experts in this area and who are penning legislation and guidelines to manage such sectors of the economy. And those who greatly overextended, but not everybody who's being hit by this recession had overextended themselves.

 

[wwswimming]

Originally posted by: Zebo
We don't have cable/sat - trying to save every dime.. We have not eaten out for 5 months...cancelled kids cells , all unnecessary spending nixed etc

what about computer upgrades ?!