View Full Version : Coming Depression
http://www.cnbc.com/id/43236764
Are you guys ready for the predicited depression as referenced in the above taken from CNBC? Thanks a lot BHO!
Definitely, the party is over.
I think there are many things that Obama could have done better - that said, given he was handed the wheel after the car was driven off the cliff, I think he also did surprisingly well.
We are living in a different world. The party wagon is over and our life will depend on our creativity and adaptability.
poetry_writer
6-2-11, 3:17pm
We are living in a different world. The party wagon is over and our life will depend on our creativity and adaptability.
I agree. We have to look at a lot of things in a different way than ever before.
Economy added jobs, dividends weren't cut, people aren't selling their houses which gives them stronger ties in their neighborhood.
But, if we're lining up people to tar and feather, I'd sooner go after the Fed and congress.
Yep. They can all just get in line for the tar & feather brush...Agreed...
ApatheticNoMore
6-2-11, 3:54pm
I could probably make it 4 years without working provided money is still worth anything (not working now, but you know will probably look for something - whether I'll find I have no idea). I really don't know what else I could do. I don't have some magic to perform that would make me invincible. I don't even necessarily want to be invincible if it means permanently living the rest of my days in some isolated cabin in the woods (not that there's anything wrong with that). I try to be educated, aware, etc..
I do strongly believe in building community and will give it my efforts. Community for dealing with hardship and crisis (if SHTF we need to turn TO and not AGAINST each other), for power, for resilience, and last but far from least because it's the life worth living.
Oh and yes please, lets tar and feather the FED!!!! :D
>>>living the rest of my days in some isolated cabin in the woods
That's where I live. It has its advantages.
I don't know. A "this time is different and we're doomed to penury" panic makes the contrarian in me want to sniff around for buying opportunities.
HMMM...a capitalist Ldahl? me like.
I don't know. A "this time is different and we're doomed to penury" panic makes the contrarian in me want to sniff around for buying opportunities.
I also live by the "if it's in the news then the likely will happen" mantra. I'm on the fence on this one.... mainly because I was predicting a much worse recession would happen any day now. So, if the media agrees with me, does that make me right or time to switch my outlook? Not sure.
HMMM...a capitalist Ldahl? me like.
Who was it who said "be fearful when others are greedy and greedy when others are fearful"?
Who was it who said "be fearful when others are greedy and greedy when others are fearful"?
I'm pretty sure that was Warren Buffett.
I am not doing anything until the US debt ceiling is raised. If it is not or if really large cuts are made to the budget we could have another Great Depression. The bond market will panic if the US defaults on it's debt.
The bond market will panic if the US defaults on it's debt.
Which I think both parties understand even while attempting to make hay. And, if they don't, just remember, we the people elected them to represent us (well, that's the going theory anyway).
The US won't default. We can pay the interest using somewhere around 10% of the *budget. But it looks like we also won't stop spending so the bigger question is, will we incur more debt or will we have to start issuing IOU's in lieu of entitlements?
* a word used figuratively as we haven't had one since 2009.
I think we've been in the Great Depression part II for 3 years, that being said, I'm wondering what changes everyone is seeing out there.
I hear people enjoying the simpler things, I'm hearing folks who no matter what their purse looks like agree to help someone in need.
No one seems so judgemental about giving up cable TV or cutting back to one good car, shopping at the second hand store.
There's a young group of housewives and new mothers who've discovered coupons, and savings. Leftovers have become quite chic.
And packing your lunch...the newest and smartest thing.
What are you seeing...
Mrs.B
Looking back from the future, I believe that our current economic problems will be called a depression.
I'm not a doomer. Once houses become cheap enough for the average person to buy, and the U.S. dollar becomes cheap enough that people elsewhere find our products to be incredible buys, things will straighten up.
While Americans don't seem interested in marketing our country's goods and services abroad, immigrants will sell them in their home countries around the world if there's money to be made.
What are you seeing...
Mrs.B
Community gardens and little garden plots in the yard are way, way up around here.
loosechickens
6-3-11, 1:29am
We should probably all remember that a Presidential election is coming up next year, and at least one side has a lot to gain by wringing their hands and talking down the economy.
Remember the "we have to burn down this village to save it"? We haven't learned a lot since then. I expect we will be seeing lots and lots of Chicken Little's who will be telling us the sky is falling (and of course, it's all BHO's fault), so get used to it. We're about to head into Silly Season, regardless of any REAL difficulties with the economy, so fasten your seatbelts, because it's going to be a bumpy ride.
The Republicans seem perfectly prepared to run the country back into the ditch.......anything, to regain power. And if we forget who drove it into the ditch in the first place, then more fools us. Hint......it wasn't President Obama.
Does this mean that our country doesn't face a lot of serious problems? Of course not. But.......I realize that President Obama is a superman, but he WAS handed a country on the brink of a total financial collapse, a huge deficit and two wars (at least one of which was unnecessary) sucking hundreds of billions of dollars of taxpayer dollars, not to mention a banking/financial system that had to be shored up, like it or not. Now, he's managed to stabilize those situations, get the economy moving again, however sluggishly, AND get Osama bin Laden, but............ ;-)
Well - We've got to judge Obama on what he has accomplished...the cries of "Booosh" is responsible for everything wrong are wearing real thin after Obama has been in office over two years. I'm saying some of Obama's fixes made the problem so much worse - he is lousy with the economy - lousy
Well - We've got to judge Obama on what he has accomplished...the cries of "Booosh" is responsible for everything wrong are wearing real thin after Obama has been in office over two years. I'm saying some of Obama's fixes made the problem so much worse - he is lousy with the economy - lousy
But, the economy doesn't start and stop with each President. Each is handed a fully formed, good or bad, economy within a set of parameters they must work with. We know what Bush did with the economy he was handed. Or anyone who can read and think knows. When Obama took office, his "office" was 50 feet in a hole. He has managed to climb up to ground level, amazingly, but the fact that he isn't flying isn't his fault.
Of course this is what the republicans will be saying. Pointing at him and saying, 'but he isn't pooping sunshine and butterflies, therefore he is failing" and of course the low information voters who can't really/ or won't find the truth, or understand how things work, will all nod in agreement.
I just thank god Obama was elected and not McCain. I like to believe McCain would have done the same things to pull us back from the brink of economic disaster, but then I'm not so sure of his judgement anymore. He did pick Sarah Palin for vice, and that first big decision showed incredibly faulty judgement.
Yes but, don't you think enough with the "its not his fault" stuff. Have you ever read the Dr. Seuss book, " The Cat in the Hat Comes Back"? The problem in the story stems from a tiny red spot, the more they try to fix it, the worse and worse it gets
- even with the help of Thing 1 and Thing 2 (Geitner and Bernanke?), that's Obama with the economy....his professorial brand of economics do not work in the real world. He needs to head for academia...then he can't hurt anything else.
The Republicans seem perfectly prepared to run the country back into the ditch.......anything, to regain power. And if we forget who drove it into the ditch in the first place, then more fools us. Hint......it wasn't President Obama.
The implication that we are now out of the "ditch" is, IMO, overstated. Most folks weren't in a very strong position a few years ago and it looks like a lot of them are worse off now. The reasons are multi-pronged and not something you can blame on any single source.
For the administration's part all they really did was spend a ____ pot load of money on the wrong things. Wars and bailouts at best created a very limited number of jobs and cost trillions of dollars. One obvious course of action could have been to gear up some domestic production. Infrastructure in the US is a mess and will need to be fixed soon or the US will fade to black. The electric grid is a terrorist's dream, there are estimates that as high as 80% of the bridges in this country are in need of critical maintenance, our rail system is antiquated, and on and on. The trillions spent on two wars and the long line of corporate bailouts could have made exponential strides toward infrastructure upgrades and created millions of real jobs at the same time. Yes, I do remember who started both categories, but I also know who has the authority to end them now. "We just inherited this mess" plays for a little while because until you've had a chance to implement *change* it is a valid claim. After a few years we should be seeing signs that the ship is beginning to turn. We're not.
Regarding the economy proper the housing bubble is probably the critical wound. No one is really to blame for that except the homeowners themselves. People are greedy sheep. Consumers spent years spending money like drunken sailors, buying too much house because hey, it will just be worth more tomorrow! And worse, living in the fantasy world that it would never end. Common sense went right out the window and you have millions of people looking for someone to bail them out of their own stupidity. If you don't expect housing priced to drop another 30% you will probably be surprised.
The jury is still out on the Fed's policy. Ignoring things like food and energy prices to evaluate core inflation is absurd. Apparently Mr. Bernanke and crew are able to exist without driving, flying or eating. Will they be able to put the brakes on inflation when it really gets going? There is a lot of room for doubt how effective they can be with interest rates already near zero.
It is NOT time to fill your bunker with MRE's, ammo, silver coins and tin foil. It IS time to look for value opportunities. I wouldn't be a bit surprised to see a 30% correction in the stock market right along with housing prices, but there are good companies who's stock is down for no reason other than the market is jittery. If you're going to be buying a house there will be plenty of foreclosures to search through for many years to come and the banks will have to wheel and deal on them. It's always a good time to grow a garden if you have a spot. It's better food that is better for you and costs less. Duh. How about avoiding debt like the plague right now? Its just time to start using common sense. Do that and you will get through this little dip just fine.
So what's the fix, then? Other than just replacing people?
I would ask what can anyone or president do to fix the economy in 2 years. It took over 10 years and a big war to come out of the Great Depression. I think we are heading into round three of the recession because of public sector job cuts. These job cuts for the most part are being caused from lack of tax revenue from the housing sector.
Until the housing sector recovers the overall economy won't recover. I would add don't blame the home buyers. The so called expert bankers out of greed approved and sold these worthless loans as bonds to make even more money for themselves. No body held a gun to the bankers head to force them to make these loans. I was in banking at the time and could not believe the loans that were being made.
Until the housing sector recovers the overall economy won't recover. I would add don't blame the home buyers. The so called expert bankers out of greed approved and sold these worthless loans as bonds to make even more money for themselves. No body held a gun to the bankers head to force them to make these loans. I was in banking at the time and could not believe the loans that were being made.
Although there probably weren't any guns involved, the Community Reinvestment Act did require lending institutions make "risky" mortgage/business loans in order to remain in compliance with the law. Fannie Mae and Freddie Mac were also tasked with ensuring that loans with favorable conditions were available within "high risk" and "at risk" communities.
Banks then did what banks do, they managed that risk by blending it into other investment vehicles. There are always unintended consequences of social engineering and this seems to be a pretty good example of a one.
I think we've been in the Great Depression part II for 3 years, that being said, I'm wondering what changes everyone is seeing out there.
I hear people enjoying the simpler things, I'm hearing folks who no matter what their purse looks like agree to help someone in need.
No one seems so judgemental about giving up cable TV or cutting back to one good car, shopping at the second hand store.
There's a young group of housewives and new mothers who've discovered coupons, and savings. Leftovers have become quite chic.
And packing your lunch...the newest and smartest thing.
What are you seeing...
Mrs.B
I'm sorry to report that I'm seeing the same old, same old here in the Philadelphia suburbs. Stores and restaurants are crowded, highways are congested, and many people still go to the Jersey shore on weekends. The only difference I've noticed is that there are very few cars at a Starbucks on my way to work that used to be a real nuisance with cars going in and out in the morning. WTF? When are people going to wake up?
Although there probably weren't any guns involved, the Community Reinvestment Act did require lending institutions make "risky" mortgage/business loans in order to remain in compliance with the law. Fannie Mae and Freddie Mac were also tasked with ensuring that loans with favorable conditions were available within "high risk" and "at risk" communities.
Banks then did what banks do, they managed that risk by blending it into other investment vehicles. There are always unintended consequences of social engineering and this seems to be a pretty good example of a one.
The issue, imo, wasn't that the mortgage backed securities were collateralized, but that the risk wasn't properly stated. The rating companies gave CDOs AA- and Aa3 ratings that should have been more like B grade. Risk and reward were no longer correlated and priced correctly.
I know it's fun to blame the CRA, and that's likely part of the problem to be sure, but that can't account for all of it (see Krugman's analysis of the situation, not that I like Krugman at all). For example, in my neck of the woods, with people I knew, it was easy to go out and get a 5 or 7 year ARM with Alt A stated income, little to no money down (either 80/20/0 or 80/15/5), and buy way more house than was needed. One loan officer tried to get me to go for a $980k loan on our household income of $220k going this route (Minneapolis, cost of living is not coast-high). Anecdotally, one friend of mine made quite a bit of money doing this, or was going to... bought a house on an ARM, sold, moved up (rolled the profits into the next house, skipping cap gains taxes), and successfully did this until he was in a $1.4mm house. And then, the market collapsed and his ARM was coming due. I'm fairly sure he walked away from it and sent the bank the keys. He contributed to the market problem without ever, ever even being eligible for a Fannie loan.
The problem, again imo, was across the board that people, including underwriters, were banking on housing prices always going up. Again, anecdotally, I know of several lenders who actually favored getting foreclosures back as they were able to sell at a profit. That is, it was a huge financial win for them to get someone in and paying a mortgage and then eventually get that house back to sell. People forgot to buy and live like house prices can go down.
Oh, just found more if you want to dig into the CRA stuff... looks like Wikipedia has a lot of resources to read further if you're interested http://en.wikipedia.org/wiki/Community_Reinvestment_Act#Relation_to_2008_financ ial_crisis
Well, coming Depression or not, I think it just makes sense to be completely debt free, learn how to garden, raise chickens, keep bees, home canning and preserving, basic sewing, basic first aid, and many other old fashioned skills.
Although there probably weren't any guns involved, the Community Reinvestment Act did require lending institutions make "risky" mortgage/business loans in order to remain in compliance with the law. Fannie Mae and Freddie Mac were also tasked with ensuring that loans with favorable conditions were available within "high risk" and "at risk" communities.
Banks then did what banks do, they managed that risk by blending it into other investment vehicles. There are always unintended consequences of social engineering and this seems to be a pretty good example of a one.
I was the Chief Compliance and Community Reinvestment Act Officer for the last bank I worked for. There is absolutely no requirement in the regulation that requires banks to make risky loans. The last five years I received an outstanding CRA rating. Employees volunteering in community focused groups qualify as CRA credit as does investments and loans to corporations or groups that support low to moderate income people. My bank made loans to housing authorities that not only qualified for CRA credit but the loans were solid and safe.
A lot of people say what you said that banks were required to make risky loans to meet CRA regulations. That is totally false. Even if a bank got unsatisfactory on it's CRA examination all that would happen is when the bank posted and published it's CRA examination it would show unsatisfactory. That is it nothing else happens. The examiners will encourage the bank to do better but there is nothing in the CRA regulations that calls for regulatory action or punishment. What may happen is the bank may lose public funds deposits. Housing Authorities look at CRA reports in deciding who they will bank with. Cities and Counties also do this. So a bank could lose public funds deposits and that could mean millions of dollars in deposits.
I need to add that a banks CRA rating is used as part of the approval process of the regulators when a bank wants to open a new branch or buy another bank. There are five things the regulators look at before a bank is allowed to expand and CRA is one of them of the 5 it is last in priority. Capital is number one.
Well, coming Depression or not, I think it just makes sense to be completely debt free, learn how to garden, raise chickens, keep bees, home canning and preserving, basic sewing, basic first aid, and many other old fashioned skills.
+1 Well on our way! When our mortgage is done, I won't be too worried about finding a way to make it, just as my debt-free grandparents had no problem weathering the Great Depression. I do worry about others in inhospitable climates, with no growing space, and limited mobility...they will not fare as well. Not too interested in whose fault it is -- it's obvious to anyone with eyes that this has been building for many years. More interested in keeping the deer out of my potato patch.
I would ask what can anyone or president do to fix the economy in 2 years. It took over 10 years and a big war to come out of the Great Depression. I think we are heading into round three of the recession because of public sector job cuts. These job cuts for the most part are being caused from lack of tax revenue from the housing sector.
Until the housing sector recovers the overall economy won't recover. I would add don't blame the home buyers. The so called expert bankers out of greed approved and sold these worthless loans as bonds to make even more money for themselves. No body held a gun to the bankers head to force them to make these loans. I was in banking at the time and could not believe the loans that were being made.
No fix can be made in just two years. It is not entirely Mr. Obama's fault that the economy is in the doldrums or that the recovery is not more robust. What can be done, and hasn't been in the past two years, is to define the problem and begin to implement solutions that will help lead the economy out of a recession. If we were ten years from full recovery in 2009 we are still ten years out in 2011.
While there are multiple reasons the housing bubble burst the buyers are absolutely to blame for part of that. I'm certain no one held a gun to their heads when millions of them bought houses they couldn't afford. The predatory lending argument is hogwash. Did it exist? Yea, probably, but how many people really fell victim to it? Certainly not all the millions and millions that were snatching up suburban McMansions as fast as they could be built. Greed, arrogance or stupidity (or all three) on the part of buyers is what put those buyers in those expensive homes with time bomb mortgages. The banks were just as greedy and should be held accountable for their part as well, but we always seem to concentrate on the corporate side with discussions here. The banks didn't do it alone. To let the buyers off the hook is just inviting the game to start right back up. Individual accountability, what a concept.
I think we've been in the Great Depression part II for 3 years, that being said, I'm wondering what changes everyone is seeing out there.
I hear people enjoying the simpler things, I'm hearing folks who no matter what their purse looks like agree to help someone in need.
No one seems so judgemental about giving up cable TV or cutting back to one good car, shopping at the second hand store.
There's a young group of housewives and new mothers who've discovered coupons, and savings. Leftovers have become quite chic.
And packing your lunch...the newest and smartest thing.
What are you seeing...
Mrs.B
Ive noticed a group of very simple livers on the north side of town. They are living in tents under the railroad tracks. Ive never noticed them before this year. I'm sure they will have fond memories of the Age of Obama.
Mangano's Gold
6-3-11, 9:21pm
I think that what has been happening for the past 30 years is just becoming more visible. Over-investment in technology in the 90's and housing in the 2000's helped mask the underlying structural changes that are occurring in American work-life.
We are seeing a clear fracturing. For the smart and ambitious, times are good and will stay good. The super-smart and super-ambituous now have a worldwide playground to treat as their oyster. But it is a different story for the commoner, if I can borrow and perhaps misuse an English term.
Economic security for people who punch clocks, metaphorical or not, is diminishing and will continue to diminish. Technological advances, globalization, and their cohorts have conspired to make the work of most Americans relatively less valuable. There is no easy fix, and there may be no fix, but it presents interesting public policy challenges.
Off topic, but to reply to M's Gold...don't you think that the cessation of teaching trades in Texas High Schools, i.e., auto mechanics, plumbing, etc., has a lot to do with this? We put such an emphasis on everybody going to college and we have shortchanged a great portion of students in Texas...Those who punch clocks would have greater economic security if they were able to learn a trade in high school instead of relegated to flipping burger...my soapbox as a Texas educator..
then I'll believe that we are going to get serious about our economic problems. I do fault the public for living well beyond their means but in defense of some, no empathy, they bought into the HGTV marketing scheme of flipping, building, and totally thinking that they could afford to live HIGH with very little effort. After all the house became the bank account for many and many thought that it would never end - well, not everyone.
I honestly believe that our investment banking system is responsible for the moral hazard that was created in the decade of the 90's. They invented financial instruments, they did predatory lending, they do not today or then resemble anything like most people think of when they think of a bank. The multimillion dollar bonuses continue even today as the FED continues to feed the revenue with no cost and allows the banks to clean up their books. I quite sure the Freein05 can tell that story much better than myself.
Even Europe is complaining about the American system of greed and understands that unless we somehow bring back some sanity to our banking system then the problem will only temporarily get better with an even bigger problem later - TOO BIG TO FAIL is still in place.
I personally think that it is time to nationalize the banks but I suspect that the economics will have to get much worse before people can accept the ideological conclusion that the free market is not serving us well, nor is it free but rather taxpayer and debt subsidized.
There is definitely a place for government in this economic downturn but the FED and the pompous self serving elitists in the banking community are not supposed to be the government - but they own it on both sides of the political isle.
No sure what is going to happen but I don't think our problems will be about entitlements or anything like that - they will be about corruption, hedge fund casino gambling, and really all that we can do is vote and the choices are all very similar. But hope is not the answer (I loved this article (http://www.orionmagazine.org/index.php/articles/article/170/) contributed by Puglogic)
With the economic downturn, climate change, and lack of opportunity for many I think we have left a very challenging word for our children. I would love to see a rebirth of simplicity in this country and it might just happen sooner than we think - it will be different but I don't think it will be apocalyptic. I do think a social revolution is in order - enough of this ignorant greed and corruption by business and government. Time to look back to the 60's movement and learn some important lessons.
Peace
Mangano's Gold
6-3-11, 9:53pm
Off topic, but to reply to M's Gold...don't you think that the cessation of teaching trades in Texas High Schools, i.e., auto mechanics, plumbing, etc., has a lot to do with this? We put such an emphasis on everybody going to college and we have shortchanged a great portion of students in Texas...Those who punch clocks would have greater economic security if they were able to learn a trade in high school instead of relegated to flipping burger...my soapbox as a Texas educator..
Maybe. I think you still run into the same supply/demand issue you do with most things. If you increase the number of auto mechanics, you can expect downward pressure on wages for auto mechanics. There is a fairly fixed amount of auto repair work to be done. Ditto plumbing. Scientists and engineers, on the other hand, have a much more open arena. They aren't playing in a zero sum game. But obvioulsy we all aren't cut out to be scientists.
The Germans seem to make apprenticeships work, though. And manufacturing in a high-wage country.
As a Texas voter, I'm totally open to trying new things in education. If the School Board wants to try something new, chances are they have my support.
Thanks for teaching our kids. My brother-in-law is an elementary school teacher, and his wife (my wife's sister) is a counselor in Texas public schools (Title I, 90%+ Hispanics, as are a bunch here in TX).
I think that what has been happening for the past 30 years is just becoming more visible. Over-investment in technology in the 90's and housing in the 2000's helped mask the underlying structural changes that are occurring in American work-life.
We are seeing a clear fracturing. For the smart and ambitious, times are good and will stay good. The super-smart and super-ambituous now have a worldwide playground to treat as their oyster. But it is a different story for the commoner, if I can borrow and perhaps misuse an English term.
Economic security for people who punch clocks, metaphorical or not, is diminishing and will continue to diminish. Technological advances, globalization, and their cohorts have conspired to make the work of most Americans relatively less valuable. There is no easy fix, and there may be no fix, but it presents interesting public policy challenges.
On Planet Money a few weeks ago they talked about this very topic. I don't remember their source, but basically the statistic they mentioned was that the unemployment rate is distinctly dependent upon one's education. IIRC, people with masters and doctorate degrees had something like a 2.5% unemployment rate, 4 year college degree people a 4.5% unemployment rate, high school diploma 9% and no high school diploma substantially higher still. That's comforting to people like me with at least a college degree, but the majority of the American population is not in that group, and that's a major problem for the economy and society overall. Obviously the manufacturing jobs that have left the country are not likely coming back. At least unless the dollar severely drops in value and we can compete for non/low-skilled jobs with other much lower wage economies. The answer, it seems to me, would be that we need to focus on developing trade skills that can't be exported. Things like energy efficiency jobs that require someone in a specific (American) location to install insulation and weather stripping or solar panels, for example. I doubt that we will/can generate enough jobs like this to bring back the working class to previous living standards but every little bit will help.
With the economic downturn, climate change, and lack of opportunity for many I think we have left a very challenging word for our children. I would love to see a rebirth of simplicity in this country and it might just happen sooner than we think - it will be different but I don't think it will be apocalyptic. I do think a social revolution is in order - enough of this ignorant greed and corruption by business and government. Time to look back to the 60's movement and learn some important lessons.
Peace
I agree with you that major change is coming down the pike, and probably a lot faster than people realize. With the rapidly ballooning government debt, quantitative easing, and the ongoing ponzi profit structure of wall street there are simply too many things that could happen to trigger a massive crisis, that it seems likely we'll eventually have it.
I pray that you're right that it won't be an apocalyptic disaster here. However, I just finished reading "When Money Dies" by Adam Fergusson, which is basically a blow by blow history of germany from the end of WWI to the late 1920s, so I have a pretty pessimistic outlook at the moment. As the Deutsche mark collapsed as a result of massive government borrowing during the war followed by massive money printing after the war chaos eventually took over German society, which had up to that point been quite stable and prosperous. The horrible suffering that so many went through would have been just as unthinkable just a few years earlier, as it is to most of us in America today, yet it happened. When farmers refused to accept the mark in exchange for their produce and people in the cities were seriously going hungry looting of farms near towns and violence against farmers resulted. Our current situation is different, of course, (unlike Germany after WWI we're still the most powerful country the world has ever seen) and surely not nearly as far along as the trouble Germany was facing in 1919, but unless we make some significant changes it's not out of the realm of possibility to see us go down an equally awful path at some point in the future. If I thought the politicians on either side of the aisle were serious about fixing things I wouldn't worry so much, but from what I see our "leaders" are only concerned with their careers, not with the needs of the American people who elected them.
+1 Well on our way! When our mortgage is done, I won't be too worried about finding a way to make it, just as my debt-free grandparents had no problem weathering the Great Depression.
We are both mortgage free and debt free, but struggling these days on our small fixed income. Realestate taxes, personal property taxes, and insurance on our very modest home, along with medical insurance, car insurance, rising utility rates, gasoline and food prices are making it tough these days.... I was sure we would be fine too when our home was finally paid for and other debt gone, but it has been a shock since DH was forced into an early retirement due to bankruptcy of the company he worked for for years - a shock that it has been more financially difficult than we ever thought. We are frugal to the max, but still it is hard and our small nest egg is losing value everyday due to inflation. I am scared of the future for ourselves, our kids, and grandkids....
I'm just sayin' that there is still LOTS to pay for even if you are mortgage and debt free, and frugal to the max....
flowerseverywhere
6-4-11, 7:50am
As others have posted, there is a fear of the "have nots" going after the "haves." Just look at the attitude many have towards public pensions and how ready they are to take them away from teachers and firefighters.
One factor, though is that we are starting at a much different level than our predecessors. Many of us here, that really aren't that old remember days when there were no cell phones (many people had party lines), you had to pay for long distance so you kept it really quick and infrequent, television cable, second car, home computers, internet, all these small appliances. Heck, I know people who grew up without running water and had outhouses. The house I grew up in had two bedrooms and four kids and like most of my friends, we rarely had new clothes, hand-me- downs from siblings and friends, and I recall lots of families that had multi-generations living with them. One black and white TV (that had intermittent programming), one phone connected to the wall, one car for a family of six. Can you imagine that today? Even the grocery stores, strawberries in January, all kinds of convenience foods, fast foods- the list goes on and on from the size of the houses, number of cars, and stuff used to fill these houses. Air conditioning is a new phenomenon. I remember the first fast food restaurant being built when I was a teen, now there are 5 within a few miles, not to mention the Olive Garden, Panera etc chains, and they are not cheap. And medical insurance, you used to pay as you go, but there was no such thing as MRI's, the extensive cancer treatments, all of these medications, transplants, gastric bypass, viagra, etc which all cost big bucks. Of course, many of these changes have been for the great betterment of society and individuals as a whole, but they cost money.
Our expectations are so high now, and that is what I like about reading here. People aren't afraid to be different, to learn to bake their own bread, make do, and be creative. Still, only the most frugal of us here match what they lived like a few generations ago during the depression.
This is not directed at any one person but as a whole to those of us living 2011 developed world lifestyles.
We are seeing a clear fracturing. For the smart and ambitious, times are good and will stay good. The super-smart and super-ambituous now have a worldwide playground to treat as their oyster. But it is a different story for the commoner, if I can borrow and perhaps misuse an English term.
I think this is so true and I see it everywhere I go lately. I traveled back to my hometown this past weekend and some of the fine old neighborhoods are now downtrodden and full of poverty. The money-makers have moved to luxury, gated neighborhoods or posh downtown condos. Their lifestyle escalates while those just getting by slip further behind. We are from that last generation that was able to find steady emplyment without a college degree but will have to seriously downscale our fairly modest lifestyle soon just to hang on as we age. It is kind of like rolling a ball uphill.
I don't think it matters a bit who is in office anymore. Big business runs the world these days.
The worry may be overblown. We spent the month of May in Munich Germany. The friends and relatives we talked to were all worried about the German economy. Germany's unemployment rate is at a 10 year low it is now number 2 in the world in exports. In Munich and other areas of Southern Germany we traveled there was construction going on like crazy.
We were at a bear garden and three men set down with us. One was German, one was from India and had spent the last 5 years working in the US, and the other was Greek. They worked in IT for an American company. They were on a long lunch break while their boss was in Las Vegas for a company meeting. We meet another gut at church he was German his wife was French and they lived in Paris but he was in Munich for a year on special assignment for his company. It is an American company with it's European headquarters in Paris. You most keep in mind wages and benefits in Germany are high but the country seems to be doing good.
+1
And one final point on the Community Reinvestment Act: it *only* applies to federally chartered banks. Countrywide and other non-federal banks had no such regulation, and they were handing out risky mortgages and repackaging them right and left. Finally, most of the mortgages that went under were not sub-prime, they were from debtors who lost their jobs and/or decided to walk away from underwater mortgages.
So, facts notwithstanding, I'm sure the 2012 campaign will continue to repeat the story about how the CRA was the cause of the U.S. housing and economic crisis - it's like playing whack-a-mole with these urban legends.
in 1999 we bought the house in which we now live. At the time, we qualified for around a $250,000 loan and we were not high income. We spent $110,000 and borrowed $72,500 of that amount. It is now paid off. It seems that too many times people have let the mortgage companies or banks tell them what they can afford. We should know better. I knew better, I settled for what I was comfortable with paying off and it is done.
Greed has been all around over the past few years.
Maybe. I think you still run into the same supply/demand issue you do with most things. If you increase the number of auto mechanics, you can expect downward pressure on wages for auto mechanics. There is a fairly fixed amount of auto repair work to be done. Ditto plumbing. Scientists and engineers, on the other hand, have a much more open arena. They aren't playing in a zero sum game.
The ability to repair things is not really a zero-sum game. Many of the things we own are disposed of with much usable life left because of the poor economics of repair. While much of that problem relates to parts cost, a more robust industry of fixing things would result in a more efficient aftermarket parts industry to support it.
As for engineers and scientists, unless someone has a new idea and the ability to bring it to market as an entrepreneur, they have the same problem of finding a job in an existing business as the mechanic.
Statements about engineer and scientist shortages have always left me jumping up and down, yelling "no, no. no!!!".
then I'll believe that we are going to get serious about our economic problems. I do fault the public for living well beyond their means but in defense of some, no empathy, they bought into the HGTV marketing scheme of flipping, building, and totally thinking that they could afford to live HIGH with very little effort. After all the house became the bank account for many and many thought that it would never end - well, not everyone.
I have compassion for anyone who worked hard to purchase a home that was within their means and has lost it or is upside-down with their mortgage. I do NOT think the government should bail them out somehow. Buying a home was and is still optional as far as I know.
House flipping HGTV style is a business venture. As soon as someone buys a fixer-upper to renovate and resell they became a real estate developer. During the whole history of this country there have been more fortunes created in real estate than any other industry, but it is also very risky for exactly the reasons we are seeing now. Flippers stuck with homes are no different than anyone else who starts a business and finds out there is no market for their product. How sorry would anyone feel for a guy who invested his money in a machine to make liver flavored snow cones and then went broke because he found out there are no buyers? Most of us would just say, "duh" and not spend a lot of time blaming the company that made the machine.
Mangano's Gold
6-7-11, 8:13pm
The ability to repair things is not really a zero-sum game. Many of the things we own are disposed of with much usable life left because of the poor economics of repair. While much of that problem relates to parts cost, a more robust industry of fixing things would result in a more efficient aftermarket parts industry to support it.
As for engineers and scientists, unless someone has a new idea and the ability to bring it to market as an entrepreneur, they have the same problem of finding a job in an existing business as the mechanic.
Statements about engineer and scientist shortages have always left me jumping up and down, yelling "no, no. no!!!".
I take your point on after-market markets not being fully developed. But to the extent that there are opportunities here they are dwarfed by opportunities presented by science and engineering. We don't even know what's possible in these realms, which is why they are so wide open. I would expect scientists and engineers to have among the lowest unemployment rates, and for that to be the norm as far as the eye can see.
As you allude to, there needs to be both capital and a way to monetize the "new". There is no shortage of the former. And people (and governemtns) of the world are getting better at the latter.
I think the US needs way way more scientists and engineers. And less financiers.
I think the US needs way way more scientists and engineers. And less financiers.
:+1:
ApatheticNoMore
6-8-11, 2:28pm
Oh man you think people with science degrees are getting jobs all over the place. NO WAY! This doesn't match anything I have seen of reality. Fine get a PhD in chemistry, the competition for the few available research positions afterward is brutal. Very very smart people engaged in dog eat dog competition. Get a graduate degree in physics, maybe if you are lucky the federal government will hire you. Yes, I know graduates in the hard physical sciences and it hasn't been a rosy field for DECADES.
So you know why not just get an MBA or an accounting degree instead, you won't work near as hard for the degree, and you might actually end up marketable.
There may be some positions in life sciences. And engineering is probably still a decent field.
Statements about engineer and scientist shortages have always left me jumping up and down, yelling "no, no. no!!!".
+ 1 In some abstract idealistic universe we need more scientists because scientists invent all these wonderful things for us. In the same abstract idealistic universe we also need more musicians, artists and poets because they give voice to our souls :P. In the actual economic reality of job markets ...
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