We’re on the verge of a great, great depression. The [Federal Reserve] knows it.

[theeedude]

It is growth, but its temporary and will go away once the stimulus effect wears off, as is happening now.

The more allocation of resources done by the government, the worse off we are.

The government needs to go back to reasonable spending levels (close to what we are taking in) and stop draining capital and resources away from the private economy and we need to have a "true" recession and rebuild the economy, its going to hurt *A LOT* but it will pass and things will be better again. But its not politically popular to do it this way.

If we did what I suggested in 2008 we probably would be on our way to a true recovery by now, but nope, we spent, we printed, stimulated, to try to get ourselves out and this is where we are now.

You wouldn't need a stimulus if we had a true collapse and true recovery, economies heal by themselves on their own over time but the pain would probably be gone by now.

Now if we try to stimulate again it will have to be MUCH MUCH bigger than we did before to make any effect on our overstimulated economy. You can only do this so much before the whole thing collapses though.

Printing money and massive government deficit spending does not help in the long run and only a small amount in the short run.

I predict that next collapse that we are heading for will be FAR FAR greater than the collapse that would have happened in 08 if we let it play, and I doubt any stimulus will get us out of it.

I really do hope I'm wrong about all of this though.

Well, don't let the stimulus effect wear off, get more stimulus going. The stimulus was too small for the size of the economy, and most of it was not direct government spending it should have been, but trickle down economics through the banks. Unless there is nothing left for the country to do in terms of improving infrastructure, there is absolutely no good reason to not use the labor that is available to do so. You have to be an absolute masochist or a Republican politician hoping for a weak economy in 2012 to not do so.
Government spending what it takes in during a weak economy is a recipe for disaster. It means we would have simultaneous private sector and public sector contractions and expansions, amplifying bubbles and crashes. Government needs to be countercyclical to the private sector, picking up slack when private sector spending slackens.

 

[IndyColtsFan]

As for "skipping" SE Asia for Africa, I think the biggest problems there are infrastructure and security. Companies who are about to invest hundreds of millions of dollars in to factories, roads, ports, and whatever else don't want to do so in a country that could suddenly have a revolution or a country with a belligerent neighbor.

Oh, I agree, but I think at some point, someone will take the gamble and it will pay off. I recently saw that one of my former coworkers started an outsourcing company and they actually have resources in Africa. That opened my eyes.

 

[IndyColtsFan]

Well, don't let the stimulus effect wear off, get more stimulus going.

Where do you draw the line though? When do you just admit that the economy was being propped up in an unsustainable manner and it is time to pay the price?

 

[theeedude]

I was a pretty big supporter of the TARP plan and of some of the other measures taken by Congress to help stabilize the country. With that being said, these policies are meant as emergency measures or one-time expenditures designed to boost economic activity. Without getting into an argument about it, I think that the TARP plan was successful and helped avert a much deeper crisis.

That doesn't mean, however, that the government can or should continue to extend welfare to the rest of the country on the pretense of "fixing" the economy, especially when it comes at a time where the country already carries a precarious debt load.

And, by the way, what needs to be done ISN'T carving a trillion dollars out of next year's budget, it's about setting up a plan to reduce spending and bring the deficit under control. That doesn't mean ending welfare programs or unemployment programs and kicking people out on the street, it means implementing a plan that slows spending rather than accelerates it.

We are still in an economic emergency. Those measures are still needed. If we take them away now, the economy will relapse, the emergency will get a lot worse, and even stronger measures will be needed to get out of the ensuing depression. Think New Deal 2.0

 

[theeedude]

Where do you draw the line though? When do you just admit that the economy was being propped up in an unsustainable manner and it is time to pay the price?

When the bond investors are no longer willing to lend to us. Right now they are willing to lend at 3% for 10 years, so the people putting their money where their mouth is don't think it's unsustainable, only political demagogues.

 

[Jaskalas]

At least you admit that the growth we had was a result of stimulus, massive deficit spending, and credit infusion. You call it "phony" but it's very much real to the people who were able to get a paycheck, pay their bills, and support their families because of this stimulus.

It's also VERY REAL to those who have to pay for the inflation your policies are a direct result of. You're killing people while screaming that it's for their own good.

Our credit is tapped, this stimulus is printing money, destroying our currency and you think it's so great. How about you go to the store or fill up on gas and then come back to us on how great destroying the dollar is.

 

[theeedude]

It's also VERY REAL to those who have to pay for the inflation your policies are a direct result of. You're killing people while screaming that it's for their own good.

Our credit is tapped, this stimulus is printing money, destroying our currency and you think it's so great. How about you go to the store or fill up on gas and then come back to us on how great destroying the dollar is.

Gas prices are falling. Bond yields, which are predictors of inflation are at record lows. What's killing people is not having jobs. It's also killing the US economy in REAL terms that a huge number of people who can work are sitting idle. That is actual underutilized economic potential that could be used to improve our infrastructure if government got off it's behind and started expanding its workforce. Instead we got states laying off people while at a time of already huge unemployment. Why don't you ask the unemployed if they'd take some inflation with a job, or be unemployed in a deflationary spiral.

 

[mizzou]

$1.50 gas would really jolt our economy, too bad that will never happen again. Im putting the blame of our recession specifically on the high cost of oil. Fortunately we are getting serious now about putting down the crack pipe but you better beleive opec wont let that happen without making us turn down a disgusting good offer.

 

[BeauJangles]

$1.50 gas would really jolt our economy, too bad that will never happen again. Im putting the blame of our recession specifically on the high cost of oil. Fortunately we are getting serious now about putting down the crack pipe but you better beleive opec wont let that happen without making us turn down a disgusting good offer.

Hey speaking of gas, where did Dave go with his proof of $5 gas?

Ohhhhh right, wrong again!

 

[Jaskalas]

Why don't you ask the unemployed if they'd take some inflation with a job, or be unemployed in a deflationary spiral.

Yeah, at this moment you can still claim 'some'. After QE3, 4, 5, 6, etc, that inflation will mean that being employed is irrelevant.

 

[theeedude]

Yeah, at this moment you can still claim 'some'. After QE3, 4, 5, 6, etc, that inflation will mean that being employed is irrelevant.

Right now unemployment is a bigger problem than inflation, which is low.

 

[IndyColtsFan]

Hey speaking of gas, where did Dave go with his proof of $5 gas?

Ohhhhh right, wrong again!

Careful now, you'll end up on his ignore list like I did.

 

[Doppel]

Gas prices aren't falling. Even if they have over the last 20 days (today up again I think), it's just a blip. I've said this is a temporary spike but even ignoring it the trend is up, clearly, over the last decade.

Senseamp I agree with, the stimulus IMO was of a pathetic and embarrassingly small size for a $14T economy. And it should be more direct spending, but that's like dreaming for unicorns, it won't happen. Also, although the government should have been able to spend money during the recession to help things they should not have had to pull it from yet more obscene debt, which the gov has done, and which is now fast approaching a critical point (and virtually nobody thinks otherwise anymore).

A well managed economy would have had reserves, if not cash at least credit, for the stimulus. It's pulled from its credit (people's willingness to lend to the gov) and very much pushing peoples' patience. It's running out of room.

There has been no recovery anymore than if I lose my job and use a credit card to fill the gap. Minus the massive increase in spending (which mostly isn't temporary, since it's to medicare, etc.) this economy has been in recession for years. It's a house of cards.

 

[Doppel]

Careful now, you'll end up on his ignore list like I did.

Only the special get on it. He will run out of signature room so has to shuffle around. It's a badge of honor. It's basically a list of people who constantly call him out on his sh*t.

 

[sportage]

Speaking of the bad economy, and the poor news on unemployment, and housing, I have to ask WHAT DO WE EXPECT?
Backbone jobs in America have long past left our shores.
Ross Perot called it "that giant sucking sound".
Add in the huge tax cuts for the wealthy by GW.
And the bailout. Don't forget that bailout.

So what do people expect? Harry Potter to save the day with some magic incantation?

The jobs are gone. Bye Bye... They will never come back.
Unemployment will forever be the huge problem.
Todays 9% unemployment will seem like "good numbers" in the coming years.
Face it, America only has four sources of employment...
1. Pushing money around.
2. Profit off the sick.
3. War.
4. Selling illegal drugs.
Sorry for the bad news, but no party, politician or stimulas scheme will solve
the terminal illness of our economy.
Unless you get your own show on Fox, or right wing radio, or a huge book deal,
or star in a major blockbuster movie, or win the lottery, you are pretty much
going down hill from this point.
Getting older sucks. But how bad that sucks will rise to a new level very soon.
The new 50 means no job, no healthcare, no home and probably bankruptcy.
But there is hope. You can always open your own meth lab to make ends meet...

 

[IndyColtsFan]

Only the special get on it. He will run out of signature room so has to shuffle around. It's a badge of honor. It's basically a list of people who constantly call him out on his sh*t.

I have to admit, I am proud to see my name on it.

 

[werepossum]

It is growth, but its temporary and will go away once the stimulus effect wears off, as is happening now.

The more allocation of resources done by the government, the worse off we are.

The government needs to go back to reasonable spending levels (close to what we are taking in) and stop draining capital and resources away from the private economy and we need to have a "true" recession and rebuild the economy, its going to hurt *A LOT* but it will pass and things will be better again. But its not politically popular to do it this way.

If we did what I suggested in 2008 we probably would be on our way to a true recovery by now, but nope, we spent, we printed, stimulated, to try to get ourselves out and this is where we are now.

You wouldn't need a stimulus if we had a true collapse and true recovery, economies heal by themselves on their own over time but the pain would probably be gone by now.

Now if we try to stimulate again it will have to be MUCH MUCH bigger than we did before to make any effect on our overstimulated economy. You can only do this so much before the whole thing collapses though.

Printing money and massive government deficit spending does not help in the long run and only a small amount in the short run.

I predict that next collapse that we are heading for will be FAR FAR greater than the collapse that would have happened in 08 if we let it play, and I doubt any stimulus will get us out of it.

I really do hope I'm wrong about all of this though.

That's pretty much what FDR discovered in the Great Depression. Government programs helped a lot, but also built an economy based on government hand-outs. Cut back the pork, that fraction of the economy immediately turns back to unemployment. Neither a country nor an individual can borrow and redistribute to prosperity. Not even the Underpants Gnomes can do that.

One ironic thing to me is that most of what saved us in the Great Depression was defense spending - things that are mostly designed to be blown up or otherwise expended with no increase in the producing society's wealth. I suspect the only reason we didn't immediately crash even harder after the war was that so much of the world's manufacturing had been destroyed in the war. It's always easier to compete and win without competitors . . .

 

[us3rnotfound]

That's pretty much what FDR discovered in the Great Depression. Government programs helped a lot, but also built an economy based on government hand-outs. Cut back the pork, that fraction of the economy immediately turns back to unemployment. Neither a country nor an individual can borrow and redistribute to prosperity. Not even the Underpants Gnomes can do that.

One ironic thing to me is that most of what saved us in the Great Depression was defense spending - things that are mostly designed to be blown up or otherwise expended with no increase in the producing society's wealth. I suspect the only reason we didn't immediately crash even harder after the war was that so much of the world's manufacturing had been destroyed in the war. It's always easier to compete and win without competitors . . .

Story of the U.S. Are we on the last chapter. Or is it Part II: WW3.

 

[Zebo]

Templeton's legendary chairman Mark Mobius: "There Is Definitely Going To Be Another Financial Crisis"

I wonder why...nothing has changed since the last one expect the DEBT has only INCREASED.....same bankers in place...same rules in place...same trash in the books...

 

[werepossum]

Templeton's legendary chairman Mark Mobius: "There Is Definitely Going To Be Another Financial Crisis"

I wonder why...nothing has changed since the last one expect the DEBT has only INCREASED.....same bankers in place...same rules in place...same trash in the books...

The Troubled Asset Relief Program was diverted from liquidating the toxic assets into stock price and bonus maintenance and the "too big to fail" corporations are now even bigger due to buying out their "not too big to fail" competitors. The only thing that can save us is strong and sustained wealth producing, private sector growth, and I don't think anyone really knows how to accomplish that in today's economic system. Both parties seem to have adopted the Underpants Gnomes' theory of job creation, the only real difference being the addition or subtraction of a few negatives. (e.g. "Step 1: We take more money from rich people and give it to government" versus "Step 1: We take less money from rich people and give it to government.") Step 3 is always "Big profit!", but Step 2 is always still blank.

 

[werepossum]

Story of the U.S. Are we on the last chapter. Or is it Part II: WW3.

I don't think another World War can save us, because in a world of nuclear weapons and ICBMs we'd likely be devastated too. I doubt we're on the last chapter though. Historically the periods in which people THINK their country or society is in its last days far outnumbers the actual occurrences.

 

[Jaskalas]

Right now unemployment is a bigger problem than inflation, which is low.

Yeah, right now. I love that little caveat you threw in there because it's true and we both agree on it. Right now it is manageable, but NOT after you finish printing money EACH and EVERY year to keep the government-run economy going.

You have to pull the plug now.

 

[Zebo]

The Troubled Asset Relief Program was diverted from liquidating the toxic assets into stock price and bonus maintenance and the "too big to fail" corporations are now even bigger due to buying out their "not too big to fail" competitors. The only thing that can save us is strong and sustained wealth producing, private sector growth, and I don't think anyone really knows how to accomplish that in today's economic system. Both parties seem to have adopted the Underpants Gnomes' theory of job creation, the only real difference being the addition or subtraction of a few negatives. (e.g. "Step 1: We take more money from rich people and give it to government" versus "Step 1: We take less money from rich people and give it to government.") Step 3 is always "Big profit!", but Step 2 is always still blank.

We can start with all the fraudsters. I believe Bill Black, S&L Chief prosecutor, when he says he could indict 10x more this time around. Throw them in jail and take everything they own. Rule of law must be upheld or it's meaningless not to mention moral hazardish.

Course politicians have compromised the system to be compromised as well so I won't hold my breath.

To big to fail and to big to be prosecuted.

Goldman Sachs Group Inc. (GS) won’t face criminal prosecution related to sales of mortgage-linked securities because such a move could threaten the U.S. financial system, according to Brad Hintz, an analyst at Sanford C. Bernstein & Co.

http://www.bloomberg.com/news/2011-...tion-over-mortgage-securities-hintz-says.html

Prepare folks...when criminals are running the country/economy you will get blunked.

 

[Craig234]

That's pretty much what FDR discovered in the Great Depression. Government programs helped a lot, but also built an economy based on government hand-outs. Cut back the pork, that fraction of the economy immediately turns back to unemployment. Neither a country nor an individual can borrow and redistribute to prosperity. Not even the Underpants Gnomes can do that.

One ironic thing to me is that most of what saved us in the Great Depression was defense spending - things that are mostly designed to be blown up or otherwise expended with no increase in the producing society's wealth. I suspect the only reason we didn't immediately crash even harder after the war was that so much of the world's manufacturing had been destroyed in the war. It's always easier to compete and win without competitors . . .

In other words, a certain level of stimulus after a crash limited the economy getting worse; when that stimulus was reduced, things got worse; and when that stimulus was greatly increased, for throwing vast sums down the toilet for war but strengthening the US manufacturing and workforce, including stimulus like the GI bill, it led to historic prosperity in a repaired economy. And today, economists are saying the stimulus is too small. Others can learn a lesson there.

 

[Zebo]

"stimulus" is going to top .001% who already own everything rest in maintenance payments (UE, Foodstamps, etc) so people don't riot. Real stimulus would be putting wealth and wealth creation back on main street.


...when criminals are running the country/economy you will get blunked.