USA 2008: The Great Depression

reply to post by gormly


Dude, you got issues, and I seriously question the validity of your responses about your job experience unless you are seriously connected. I have a friend with a masters in education and was offered a job a few weeks ago that required a masters degree and it offered her 8.50 an hour. You are dillusional at best if you think the economy isn't in bad shape and that there are enough jobs for everyone.

reply to post by infinite
'cause i like talking to ya! we can disagree and still talk. i looked up the definition of recession (a period of reduced economic activity) vs depression (a period of low general economic activity marked especially by rising levels of unemployment).

I do not think you are a “government agent” but I did consider an “employee.”

I do agree China has an agenda to cripple the US. They started in March 2007:

We are approaching the most serious economic crisis since the great depression, and American life is going to be disrupted in ways that we cannot now imagine. The reason is that there is too much debt, and the new bankruptcy law means that, because those debts can never be discharged, the economy will never get the chance to restart itself that has brought it out of so many slumps in the past. What is worse, the ordinary American debtor is not to blame. There is only one debtor to blame. It is the federal debtor.

But why will it happen now? For the same kind of reason that it did in September of 1929: something has happened that will have enormous economic consequences that nobody now foresees, because of the corrosive synergy it will have with other factors that are out of balance.

In July of 1929, the Federal Reserve raised interest rates. This led to the raising of interest rates on margin debt, which resulted, in September, in a selloff that left the US economy extremely illiquid. Combined with the failure of the Credit Anhalt Bank in Australia, the subsequent worldwide cash shortage resulted in horrific deflation due to lack of money. The consequence was the great depression.

What has happened this time is slightly different, but the consequences will be the same. It is that China has decided to stop buying US debt. This means that a huge purchaser of US treasury debt is no longer there. But that is only the beginning of the problem. Last week, when the US Federal Reserve announced that American interest rates would remain unchanged, the dollar immediately dropped to a 2-year low. This means that countries like China, loaded with US debt and thus US dollars, suffered a tremendous loss. China is seeking to protect what is actually a hopeless position by no longer buying into what is obviously a collapsing currency.

But the dollar is not just a currency, like it or not, it is THE currency. When the dollar falls, values fall. It’s that simple, and it’s because the world has adopted the dollar as a de-facto international currency. In this case, at its peril and to its eventual regret.
The Bush Administration made the decision to take the country into heavy debt to finance the Iraq war. It was said at the time that “debt doesn’t matter.” The moment I heard that I though, ‘here comes the next great depression.’
When a country takes on debt beyond its capacity to manage, its citizens begin to be unable to repay their loans because the national debt is driving up interest rates. This syndrome has been the curse of Latin America, and it is about to unfold here, because the Administration took on far more debt than the economy could sustain. Far more.
The result is that the dollar is falling--that is to say, the de-facto cost of money is rising. Interest rates are rising no matter what the Federal Reserve does.
At present, the American economy’s ability to sustain its debt is faltering. Because of regulatory insufficiency, the mortgage lending industry has been allowed to fuel a false prosperity on the backs of loans to house buyers who were not, in fact, qualified to make the purchases that they did. And they weren’t qualified BEFORE all this happened. The inevitable result is in the news now every day: foreclosures, foreclosures and more foreclosures. But it will get worse. The next thing that will happen is that credit card debt will begin to become unstable. For years, banks have been allowed to charge usurious interest for this debt, and it hasn’t mattered because the economy was healthy. But now it does matter. We are running out of places to put American debt, which means only one thing: it is going to come back to haunt us.
As the dollar falls, the interest the US pays on its debt instruments must rise so that the debt will find a market. But what China has done has radically reduced the size of that market just when the debt has risen beyond our economy's capacity to handle it. Now, the US Treasury must raise the interest it pays on its instruments until a much smaller marketplace is willing to absorb them.
This will force interest rates higher across the board. It will force the Fed to raise interest rates here at home to protect the dollar abroad, lest our paper become, as Argentina's did a few years ago, too expensive for us to sell.
China’s decision is the equivalent of the Federal Reserve raising interest rates in the summer of 1929—a act with consequences that will be heard round the world, and will change all of our lives. The US media has the economic consciousness of a flea, so you won't hear much about it, unless the Administration tries to put pressure on China to resume buying.

www.unknowncountry.com...

I believe China and Russia as members of the Shanghai Cooperation Organization have turned the economic tides on the US to bring us down.

I have felt it and, imho, depression comes to mind, economically speaking.

reply to post by Rockpuck

What you have failed to see in your youth and apparent arrogance is that these
ignorant" people fuel your job. When they have no more money to invest or are to scared to, then you will be out of a job just like them. It generally is not a good idea to bite the hand that feeds you.
When people simply cannot or will not adjust to these conditions they will bring about the downfall of the rest of us. It is not as easy as one thinks to make a midlife career change as you have yet to have a midlife.
Our economy is fueled by perception and very little else. If you think that you are above a meltdown of the system you might be in for a rude awakening.
If the majority of the people feel that it is unwise to invest then the economy will collapse.
Your youth and inexperience tell on you. Many here have been through economic downturns before and survived it nicely. It might be advisable for you to listen to their experience when they say that it is worse than they have ever seen.
I have survived and even thrived through the downturn from the late sixties on up. I think that I might know more than you about that since I actually lived through them.
Historical documents cannot give you an adequate idea as to what happened then and what may be about to happen now.
What we are seeing now has never been seen before. You haven,t even seen a bear economy yet let alone what may befall us.

respectfully
reluctantpawn

By the way I require any who might want to handle any of my investments be completely out of dept and have at least a years worth of income on hand. Can you handle my portfolio?

[edit on 2-4-2008 by reluctantpawn]

reply to post by LLoyd45


First off CP great post, I agree 100% as usual.

LLoyd -- I have a few titles as I work for several companies under an umbrella parent company.

I am defined as a Sales representative (based on products) but am essentially a Fiancial Advisor (without official documentation from the state I cannot claim that as my title nor can I represent my self as such.) and Securities trader (a different set of products) .. in which I do anything from life insurance and annuities to mutual funds, Roth IRA's, 401(k) and benefit plan oversight for small businesses.

My new title next month or so will be sales team manager, where I will cover 6 accounts with values past 6 digits under my managment, including oversight on 6 other agents. However I will remain the sole investment representative on my own staff as no one else is licensed by the state to deal with variable products. (stock market influenced investments).

I got my insight to the economy by reading book sheleves of economic books, as well as history and in history economics is very much involved.

I never claimed to know everything, nor do I now, and admitt I do not hold a college degree nor have I taken anymore then 2 economic classes in college while I was there. Most of my time was spent studying the history of the Celts and Irish contemporary history. Which I know has nothing to do with my job.

I'm an arrogant SOB. I know that. I won't change that either.

No hard feelings though.

reply to post by gormly


I am sorry you're compelled to leave. I think all your points are definitely worth the effort it took to write them as well as the relative little effort it takes to read it.

I won't continue to debate your points, since you've already had an 'earful.' While I can't speak for anyone but myself, I hope you can believe, I sincerely meant neither disrespect for your nor your position regardless disagreement on some points.

reply to post by reluctantpawn


And you would be wrong. If I where to loose all my clients who let their finances decay there would be two new clients who have an abundance of money and need guidence. So as to end up like their fathers. A lesson I my self learned.

your bigotry that youth is ignorant comes from no insight what so ever except a pompous attitude of self supiority that you feel comes with age. Age does not gift to you wisdom, and so just because you have walked the Earth longer then I, you are in no better place to talk economics.

Computer spazzed out..

[edit on 4/2/2008 by Rockpuck]

reply to post by Rockpuck
No hard feelings here either. We've agreed to disagree, and we'll leave it at that. Thanks for the reply.

reply to post by musselwhite


Excellent post. It goes to show how interdependent we are on others. This is another cause for concern and uncertainty. That it may be a root cause is plausible. Couple this with the points I made in my first post and you have a recipe for disaster. While we may now just be in a downturn, I would not like to see just where it might bottom out.

respectfully

reluctantpawn

When the pandora was let out of her box (like i described on page 6) , the masses need to get the will to either sink or swim

that includes doing whatever it takes to find a job, retrain for a job, make connections, whatever. Their will always be individual casualities where people do all of the above, but a combination of bad luck and unpreparadness, OR lack of perceived urgency and effort catches up to them. It is very unfortunate.

And i beleive we are in a recession right NOW, not maybe, not 3 months.

it comes down to understanding that the numbers are politicized. CPI was re- weighted to create an artificially lower number (during reagan admin) AND even more importantly now excludes food and energy. Inflation appears to many "realists" that it is under reported due to these two factors accounting for currently appox. 3 percent distortion. This means that official inflation adjusted GDP "growth" of 2 percent is (in the real world, not that of politicized numbers) likely negative 1 percent at least. Note wall street is a condifence game, is it really that difficult to imagine why polticians and bankers would like to manipulate the numbers ( to get re-elected and create an enviornment of confidence in markets!)

but i gotta agree with Mars on the point that these are just definitions, nothng else, trying to put a dynamic complex thing such as an economy, into a box (fitted by a definition) can be a less than accurate view of things, especially when the rich get richer, and the poor get poorer. But let this not be an excuse to just point the finger, obviously people should get off their butt's and work their rear end's off to do what ever it takes to move forward, and their are still many opp's for advancement in this economy.

reply to post by Rockpuck


Actually, I'm guilty of the worst kind of debate no-no in that I really don't know of an 'alternative' to suggest. I mean, I understand that there has to be some kind of solution, maybe not one that will save everyone the economic hardships looming on the horizon (actually, more like, knocking at the front door). But for the life of me I can't see a solution that would satisfy me personally.

I don't want to be a hypocrite, so I will admit up front that the only solution that I would greet with a malicious grin would be the one where the financial interests that I personally believe are responsible for this debacle make no additional profit whatsoever, nor will there be a bail-out mechanism for people who are willing to repossess a home, but expect their business to be considered more worthy of leniency simply because the lion share of their clientèle are 'people of more importance'.

You see, I feel this situation was precipitated by those who's profit driven 'damn-the-torpedoes' attitude marked the cornerstone of their success. Some call it greed, I think it was very realistically it was a sentiment akin to gamblers' 'thrill issues'. I also blame those bodies who, on paper, were mandated with a more responsible approach.

But ultimately, I blame the representatives of the American people who used the game of politics to achieve their arrival at a seat of power, then callously disregard the mandate to protect the people for whom the work, all because bankers, insurance conglomerates, and big-money handlers throw way better parties, and will employ them when their 'public service stint' is over. (for clear examples of this check out the 'personnel flow' between big business and the ATF, DOD, FCC, USDA, EPA, IRS, FTC, FAA, and the like.)





[edit on 2-4-2008 by Maxmars]

musslewhite

the shanghai cooperation council is an orginazation with growing leverage and influence

perhaps they will help form some sort of Asian union

the saudi's have picked up alot of the slack that the china-men have left when they slowed their treasury purchases.

higher oil prices (i have wondered) may have a beneficial effect on demand for treasury debt, because are oil petro-recycler's in the gulf now have more profits and dollars to invest with.

as long as nobody try's to overthrow the house of saud, and they decide they don't want to voluntarily committ political suicide and face the wrath of the u.s military i think we will have the world reserve currency and be cushioned from hyperinfationary threats.

the following is pure speculation;

short term a sustainable take down, in commodity prices may be a threat to petro recyling volume and dollar demand, this would probably be countered by a U.S offensive in the ME which could drive up the price of oil, and increase petro profits and thus recycling as well as anglo-european influence in the ME.

*something tells me that when america can no longer take on more and more debt that the bankers and the UN may decide the dollar as reserve currency doesn't make any more sense, perhaps thru a covert attempt to over throw the house of saud or something (which is the last pillar of dollar support) this could be achieved, u.s multi national corporations may not be against this type of scenario, because they may be losing profit in america (due to less consumer disposable income) the next best thing for them would be to focus overseas and the international bankers may be fixiated on bringing the consumer debt game to the emerging markets, where the profit potential is highest! of course remember that foreign intrests and emerging country's are also gaining more and more ownership (thru soverign wealth fund bailouts) of american investment banks, which may also find they are able to cross the atlantic and focus on consumers have room to take on more debt. if the dollar was taken down, foreign currency's could appreciate faster, and the citizens could see their wages and their abilities to take on debt (bankers's likee) grow.



[edit on 2-4-2008 by cpdaman]

reply to post by Maxmars

I mean, I understand that there has to be some kind of solution, maybe not one that will save everyone the economic hardships looming on the horizon

There does need to be a solution.. I believe mass deflation and returning to the Gold Standard is the best alternative.. there are not Gold bars in the world to equal how many dollars there are.. which means the Dollar has NO value except what we say its worth, or rather, the will of people to trade in Dollars knowing full well someone else will accept the Dollars to buy something else in Dollars. If no one took Dollars because people lost faith, you could have a billion of the little buggers and be worth absolute Nothing. Squat.

Which is where we get the big fear of.. the Petro-Dollar declining.. which is a big cause of Inflation .. or rather, one of the many contributors..

I personally believe are responsible for this debacle make no additional profit whatsoever, nor will there be a bail-out mechanism for people who are willing to repossess a home

I believe in a Central bank .. not a private bank.. a bank of the people, run by the Government and by ELECTED officials. The bank should run the Gold Standard, should hold a standard interest rate, and NOT WORK FOR PROFIt!!! how dare America charge its self interest when WE should be making the monet to begin with. It is our soveriegnty that has been assaulted by moving our monetary system into the hands of private citizens. IMO of course. It would destroy the economy, and re-define the way we live.

I believe the economy should not be held up with controls that 5 years from now will have to be repeated, as a system of debt is held up on a system of debt, only to be rescued by debt to make more debt to generate the debt needed to keep the debt affloat!?..

We need a currency of value, not a certificate of debt. We need to expell private banking institutions from our society and naitonalize our soveriegnty under the control and over sight of the Federal Government.

That would be my proposal.

reply to post by cpdaman


But eventually oil per percentage of peoples wages will cause large scale inflation in its self.. it will break the back of the Middle Class...

Eventually whether we loose the reserve currency status.. or we continue the plan you outline.. one way or the other, we WILL fail. Continueing on in the Middle East is only delaying what must happen.. and what will.

Someone making $6 can no longer afford to work. Rather, he will work to drive.. thats not the America we know and love. It is what we are becoming though.

Perhaps we will be soon not all to different then the Third World as our cities ghettos grow.

To add a terrifying thought.. in relation to history. We very well could be seeing the decline of our civilization... or through conquest of resources, the rise of our empire.
[edit on 4/2/2008 by Rockpuck]

[edit on 4/2/2008 by Rockpuck]

A great Quote for all of us to remember :

"A Recession is when your neighbour looses his house"

"A Depression is when YOU loose yours"

Think about it !

Shouldn't we avoid tying currency to finite resources? I am no economist, and certainly am guilty of financial ignorance on many levels, but as long as we tie value to physical objects, aren't we in danger of the same kind of hording and dishonesty as we face now. (not that fiat money is any better - personally I think its worse).

The whole specie thing is a question I can;t wrap my head around. Why is possession of material goods the proper method? I'm not trying to come off all Trekkie and new age, but isn't it 'ownership' issues that gets us into these conflicts to begin with?

reply to post by Maxmars


Well... yes and no.. it all depends on your personal philosophies.

My self.. I believe money should be finite.. not infinite.. because if its finite it has real value, you work for something real. There is a certian amount, and no more, so to hold it is to have increased value.

Now.. Gold may be a standard, but Silver, Copper, Bronze and Platinum are also used.. and yes, there can be inflation. Even Rome who used Gold had inflation.. BUT .. there is not an infinite amount of Gold to throw around.. which is what our current problem is.. money is made up, you want a loan POOF there is some money for your loan.

The biggest problem with Gold and using a Gold standard is that.. it will increase the difference between rich and poor.. the haves and have nots of the world will be separated by the finite resources.

The other problem.. in todays world no currency has value, no one invades America to steal our Dollars, and we did not invade Iraq to steal their currency .. but with Gold, empires once destroyed eachother to take Gold supplies.

The next problem with Gold compared to Infinite money supplies such as the Dollar.. is the standard of living will drop like a rock.

I can make 50k a year and buy all kinds of goods with it.. nice vacations and big TV's, a nice car and a huge house. The money is worthless, it means nothing, its backed by faith but.. I still have a car, a house, my vacations, my standard of living.. you cannot argue that.

If I made my wage in Gold.. well considering the world supply of Gold is small, my job would be eliminated anyways because my services wouldn't be needed, I might make 1/2 an ounce of Gold a year in wages.

Then I would have to be taxed what ever portion of money I have at the time the tax man comes..

So I got 3/8ths an ounce of Gold.. which would be split over 12 months .. I might be better off then those making 1/100th an ounce or 1/1000th an ounce of Gold, but I won't have Tv's, or a big house, nor a fancy vacation .. those services would disapear as they are driven by massive amounts of cash that, while means nothing, is backed by faith so you can get a service in return. Will a scientist work in a lab on a wage of 60 pence a year? No. He will probably be farming to keep his family alive.

Without a Fiat currency, the Information age never would have happened. Debt spurred the economy, and it made us who we are.. this technological explosion has to do with percieved wealth.. take that away, no one can buy TV's, so no one will make them. Considering the massive amount of Humans alive, Gold divided over them will be strained, nations will horde it as will the wealthy, so bartering would be the worlds biggest form of currency once more, but again.. you can't buy a boat with a chicken and a pretty sea shell can you?

But there are benefits, and this is where your personal philosophies come into play. I believe the technological age built on nothing, represents nothing, and should go back the way it came. TV's, big cars and massive houses are not needed.. but that my personal thought.. I could only be happy in the country on a farm with goats and chickens.

But I also don't believe every Human should be self defined wealthy, to be overly expressive with their wealth and spend it on items and products they don't need, all the while doing so only with debt, ie, credit cards, mortgages, and so forth. If you don't have the wealth to buy something, it is my personal belief you shouldn't have it. With the Gold standard loans are there, but used far, far less.. because there must be an assurance that a material good will be presented. This is an old and outdated way of thought. But you can never restrict a fiat currency that is not based on a material substance that is finite. You will always have larger inflation and far more money in the system then what really represents the true wealth and worth of your society, and on an individual level as well.

Rockpuck I agree totally we need to go to a gold and silver standard monitary system and dismantle the fed. This eliminates taxes because the government can print money as it wants as long as they have the gold to back it up. So this keeps money in our pockets and limits this gross spending that the government is doing and saves us a hell of a lot of money in yearly interest we pay on all this borrowed money.

Youth is not bad Im 26 and started my company at 22 and became very well off by 24. Just because we are young doesnt make us dumb.

As far as the facts of the recession that assumes that you believe the numbers that the government is feeding you. I tend to trust no one but my inner voice and so far in life the inner voice hasnt led me astray. You can go around and just sense that something is not good and if you cant sense it then thats cool not all of us are the same.

But when you look at the prices of food, gas, education, insurance, and other everyday items and how they are skyrocketing but yet the government data that comes out shows virtually no inflation you have to say to yourself hmmm.

When you look at all of the jobs going over seas and no these are not just manufacturing jobs either my wifes mother who works at Franklin Templeton a huge brokerage firm had her whole accting dept transfered over there all average pay 40k to 70k a year that cant be good.

When you see the dollar tanking and considering that we import everything that is not good also. Also China and other countries going to slow down on buying our debt.

When you see banks having to raise billions of dollars and borrow billions just to stay in business and they have to beg the fed to buy all their bad debt which we will pay for that is not good.

When you see the government panicing like they were in 1929 this also cant be good.

We are in a war spending billions and out national debt will be 10 trillion by the end of 2009. Bridges and roads are in despair and we are falling way behind in education even though we pay more than any country in the world.


I dont need GDP or Unemployment to let me know our economic situation I have something called common sense and I lack of trust for anyone even our government and Rock I know you can respect that

reply to post by mybigunit

I dont need GDP or Unemployment to let me know our economic situation I have something called common sense and I lack of trust for anyone even our government and Rock I know you can respect that

Not only respect I completely agree. With everything you have said.. the only point I was trying to make in this thread to others was that.. you cannot base all your information on the economy based only on your personal experience.. because even in the biggest economic boom there will be those loosing everything. The guy from Portland makes good at making my point.. a city that is expanding more then many other American cities yet in his eyes its all going to hell.

But besides the point. As usual me and you are on the same page as far as the economy goes.

reply to post by musselwhite


No, I'm not that either.

Infinite is a 22 year old who is currently getting his business degree. I have no idea how you came to the conclusion I was a government agent or employee just because I knew what a recession and a depression meant.

In future if I stop posting in a thread, please do not comment my profile asking me to return to a topic I've lost interest in. Rockpuck and others have defend (even strengthen) my argument.