Depression

[Anonymous]

DDD, did you get another bad batch of coke or something? What in the heck are you jabbering about?

[Anonymous]

Here’s a rejoinder to the excess consumption argument from a thoughtful economist:

“There are certainly many people who share your concerns. Let me just call a few caveats to your attention.

“It is perfectly plausible that the rational, optimal savings rate has changed over time (i.e., gone down), for example: (1) Social Security and Medicare make it less necessary for individuals to save for retirement, (2) an older population wants to save less than a younger population for life-cycle reason, (3) less volatility of income induces less saving for precautionary purposes. Thus, I don’t think it’s necessarily correct to assume that the consumption/GDP ratio has to revert to its value from 1946.”

[powayseller]

That only makes sense if social security and medicare were solvent and perceived as such by the population. However, few people believe social security will be around for them in any meaningful way, so I don’t buy reason #1. An older population wants to save less? Since when? They are the most frugal bunch around, from the retired people I’ve seen. I don’t buy #2 either.

The last point has merit: people spend and don’t save because we haven’t had a real recession in 3 decades. So the reason we consume more is not because savings is obsolete in this “new era”, but because we forgot what it’s like to be in a recession. Believe me, by next year, more people will wish they had saved for that rainy day, and we’ll have an entire population once again in awe of frugal living.

[LookoutBelow]

I think one would be wise to consider the possiblity that we are ALREADY in a deppression and have been since around 7/01. Coincidentally, the tragedy of 9-11 just happened to occur and that helped mask and distract the (sheeple) populace into believing that the tregedy was somehow responsible for the high tech bubble market collapse, Enron and all the rest of them after that.

 

Enter easy money and we are given an avenue of investing that will quickly and virtually pain free, garauntee a quick partial recovery of the dot com/ high tech collapse for a undetermined amount of time……Not completely avoid it, but detour the effects…..for a while anyway. 

 

Maybe, just maybe,…Greenspan (easy Al) did what he did to prevent the pain of the depression for a few more years…….Nobody wants to be at the helm when the ship hits the rocks…But like physics, the laws of economics are hard and fast, you can with tremendous manipulation, slow the effects of it, temporarily detour its effects, but you can NEVER completely eliminate the effects of it and its necessary corrections.

If capitalism is going to work, corrections in markets MUST be allowed to occur unimpeded.

At some point in the future your bag of tricks will run low…….THATS the scary part, what will happen next ? Who knows, even the best of em are scared of the coming financial cycles…….Some say it will be a more severe depression than the one we would have got if they didnt manipulate the events that got us to here.

[powayseller]

I’ve been reading tidbits of the government wanting to help the banks and homeowners in preventing foreclosures, but what can they do? Raising taxes to bail out banks or consumers is bad for the economy and would slow consumer spending. Restructuring debt could lower returns for bank shareholders and MBS investors who own the debt. The only way to prevent payment shock is to put interest rates back to 1% or 2%, in my opinion. What can the government do? What percentage of people will face payment shock?

Let’s also remember the tax liens. I checked foreclosure.com today, and was surprised how many tax liens are out there in Poway alone. Whereas most NODs are in the lower-income areas of Poway, the tax liens are in the upper-middle income areas. Again, people I know are on the list.

If any of you got a subscription to foreclosure.com, you would probably see people that you know in pre-foreclosure, bankruptcy, or with a tax lien. The thing is, you would never know it unless you checked out the website. They don’t walk around with a sign on their forehead. It’s just another reminder that we can’t judge a book by its cover. People act like their life is so together, while in reality they are crumbling inside, their finances are a wreck.

[Author]

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