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This started in another thread, but it deserves it's own.



Accountable;806996 wrote: I wish this subject had been given its own thread, but I'm just as much to blame for that as anyone, eh?



This has to happen -- inevitable result and all that. The reason the gov't is standing back is because, despite the schoolbook version of history, government programs did not stop the Great Depression, it prolonged it ten years longer than it needed to be. We were still suffering long after Europe had recovered.



This is what happens when people overextend themselves financially. We've stopped being responsible for ourselves. Hell, we've stopped feeling responsible for ourselves. Just the other day one guy called another "tight" because he waited to buy a car until he could pay for it in full. I haven't bought a car on financing since 1982. Being financially responsible is a punchline now.



I skimmed this timeline and noticed some scarey parallels, such as President Hoover saying in 1929, "Any lack of confidence in the economic future or the basic strength of business in the United States is foolish." We're going to repeat history because of individual, institutional, and government financial irresponsibility. I just hope it doesn't last too long.


Galbally;807059 wrote: I agree that this deserves a thread of its own, so you start it off there. I think that some of the points you make are certainly very valid, my own instincts would be similar about fiscal responsibility and accountabillity being the main problem, the US government is always going on about not interferring in markets until of course very large financial institutions get into trouble, then they get into the very socialist practice of using vast amounts of tax payers money to prop up a system that is fundamentally flawed because there is not enough direct accountability in Wall Street and elsewhere for its more risky ideas, so definetly investment banks, property companies, and hedge funds that have allowed themselves to get into this position should bear the consequences, (i.e. they should go to the wall) unfortunately it does mean that a lot of people will lose their jobs and the economy will nose dive over the short term, but in the long term a healthier system should be the result, and thats much more beneficial in the long term.

Acc

I read in today's Boston Globe that Alan Greenspan said this is going to be the worst situation in our country since the time of World War II. He said there will be MANY more casualties before this goes away

This Treasury Secretary is just making things worse, in my eyes. If I hear his litany of "flexible, resiliant, strong" one more time I'll scream ........ again.

Acc, I had an employee one time tell me,



" Just because you don't have the money to do something, that shouldn't stop you. This is America we should be able to do whatever we want."



This employee had just consolidated $10,000 into a single loan to free up his credit cards so he could charge a trip to Hawaii.



Needless to say my jaw hit the floor.

cherandbuster;807363 wrote: Acc

I read in today's Boston Globe that Alan Greenspan said this is going to be the worst situation in our country since the time of World War II. He said there will be MANY more casualties before this goes away


As someone who presided over the federal reserve from 1987 to 2006 it does rather beg the question what he was up to. This is hardly something that happened overnight.

I think that the point about Greenspan is valid, in that if you look at how the rules on the financial system have been continually relaxed in the name of "deregulation" or as its known in the real world, "letting your mates from college who went into big buisness do whatever they want to do" he does have questions to answer. The rules on Banking for example in terms of the amount of reserve and liquidity required to operate the bank within regulation has been seriously relaxed over the years, which allows for the more "risk-prone" (lets use that euphemism) type of financial institution to operate at the margins of common sense for many years, that has to be a big reason why it seems to have gotten out of hand so badly, but more importantly why no one called a halt to the crazyness before it was too late.

I have to say, they are always banging on about one kind of diaster after another in the media, but this one seems like the real deal, wow what a legacy Mr Bush, wouldn't like to be the new guy (or girl). A pointless war with no end in sight, and now a bankrupted financial system, and problably the biggest post war depression in America. Its not all Bush's fault though, this stuff goes back a lot further than 2000 for definite, but will probably be remembered now for this nearly as much as Iraq, as people rarely forget about losing money.

I am not sure what the implications are for us in Europe, but I am pretty sure they will be serious, the Euro is very high now, too high if you ask me, and unfortunately we can't all go shopping in New York (though as an upside, the more high-quality American products are much cheaper over here now, but thats bad for us in the long run) I don't think our banks are immune from this stuff either. Obviously in the U.K. they are already having problems with Northern Rock and now it looks like some of the others may have some problems as well, what a mess.

YZGI;807412 wrote: Acc, I had an employee one time tell me,



" Just because you don't have the money to do something, that shouldn't stop you. This is America we should be able to do whatever we want."



This employee had just consolidated $10,000 into a single loan to free up his credit cards so he could charge a trip to Hawaii.



Needless to say my jaw hit the floor.
And the sad thing is that he's right, up to a point. The credit cards will gladly support his vacation and charge him interest on this new loan. They really don't care if they get his money or if he goes broke and declares bankruptcy because they'll get their money back, either from him in minimum payments (and huge profits in interest) or from the insurance company (which will get bailed out by the gov't).

I think its also important to point out that not everything about the economic system is damaged, its basically a problem due to bad lending practices, and focus on short term profits at any cost, which fits into the whole hubristic ideology of the masters of global finance, there will certainly be some difficulties in the near future, but it need not be the end of the world by any means, as long as the people who need to keep their heads do keep their heads, and don't turn a crisis into a catastrophe, then again appealing to market forces to remain rational in a bear market is usually a waste of time.

I read the other day that most major banks in the us..are now either denying second mortgages or severely limiting them..the day of over borrowing is about up...i heard bank of america bought country wide bank and then had to give them back their loans..it was way to much in the hole for b.o.a. to be able to absorb..citibank is going down the tubes in the south..they are not doing well at all...



of course i cant substantiate this..i hear it from friends who work at b.o.a. and suntrust..

rjwould;808011 wrote: Don't ya just love that "let the market work" thing conservatives like to spew? Now I'm sure they are pulling that other line out of their asses, ya know that "tough love' thing?:wah::wah:



And Most democrats aren't any better..
When you catch your breath, what would you suggest other than letting the market work?



Check the news. Repubs are going the corporate welfare route, btw.

rjwould;808011 wrote: Don't ya just love that "let the market work" thing conservatives like to spew? Now I'm sure they are pulling that other line out of their asses, ya know that "tough love' thing?:wah::wah:

And Most democrats aren't any better..


I actually think that over the long term that market based business does work, but only if its regulated properly to ensure that it is really is a functioning market and that the big players don't have the mentality that they can never lose. I do think that the business models that are being used by this big American corporations over the last 20 years are very short-term short sighted ones based on maximizing profits (at any long term cost) every quarter, never mind every year. Thats a crazy way to run a long term business of any kind unless you are a criminal (and feel you can skip town when the heat comes down), or that you control the system to such an extend you feel you won't reap any consequences going nuts with other people's money.

Because the bottom hasn't fallen out to date, this has simply increased the hubris on Wall St, thinking that they knew something that the rest of the world didn't, that there was a "new" type of global economy, as if the laws of gravity no longer apply to speculation bubbles and bad credit. This hell for leather, don't spare the horses model has become fashionable, and it has made a lot of quite respectable, stable, and profitable business' both in America and around the wider world look somehow out of date because they don't risk their core business, sober financial strategy, or long-term future for the sake of ever more impressive short-term profits.

It's the "maximize our profits like there is no tomorrow" idea, and unfortunately (as is always the inevitable case) now its actually that once far off tomorrow and its pay the piper time. Its actually the action of a market waking up to economic reality after a long hallucination that we are witnessing. Of course the government are now going to step in to try to prevent market forces from passing judgement on the financial sysem by crashing it, who will win remains to be seen, it depends on how much tax payers money is available to bail out the system, and how possible it is to convince the ordinary people that their tax is required to bail out super-rich companies. You see, life is not really a party, and business models based on the idea that it is, well, much like party's themselves don't last very long.

I would think that there will be quite a few up and down days over the next few weeks, whether their will be a really huge crash is still all guessing, but its not impossible, but then neither is the best case scenario that it won't be so bad and the US economy will weather it in the short term.

rjwould;808073 wrote: Very thoughtful post, I agree wholeheartedly, and I too hope you are right...BUT, and as you see, it is a big 'but', If we get lucky, policy will not change because America is fixed on short term thinking mostly.



That's due to our overindulgence in competition and warrior attitude, and the idea that everything is self healing in time..



The problem is rooted deep into our psyche and starts in our education system...That is why America is doomed eventually unless it has fundamental change starting there.
I don't get it. You think it would be better for us if policies supporting short-term thinking? Is that just for now so that we will have to make more sweeping "real" changes later? If so, I agree.



We need fairly radical change.

To be honest, the things you are talking about are very deep seated kind of changes that really only occur in reaction to events, American and European, and indeed all major world powers cultural and political outlooks change over time depending on conditions and the situation that people find themselves living in, so I am sure that what is happening now will colour people's attitudes to many things, and hopefully it will make them get a sense of perspective on the situation we find ourselves in in this world.

But that's all long term stuff, at the moment, the major issues are the narrow ones, of finance, banking, the global credit system, and macro economics. I am sure the Fed, the European Central Bank, the Bank of England, the Japanese central bank, and the other major economic powers will be doing they damnest to try and minimize the damage from this situation, because the US economy crashing is not really in anyone's interest, but if the problems go too deep, then there isn't much that the outside world can do about what's happening internally in the US financial system.

On the upside for the U.S. the lowering of interest rates, and the day to day deficet that the US government is running is seriously lowering the value of the dollar, and that is good for US manufacturers, who look a lot more competative globally than they did, though it does also increase the price of commodities that have to be imported into the economy thereby causing inflation in the long run, still any silver lining is a good one when there are a lot of clouds.

Just thinking, that the difference in the worlds approach to different crises is so marked isn't it?, for instance, the fact that the planet's climate is rapidly and observably destabilizing is treated as some kinda far off thing, a bad joke, or something invented by tree huggers, despite the reality which is pretty alarming. You know, little facts like the one that the ice sheet in the artic is melting more each year and will be completely gone at current rates by summer 2013, keep cropping up each month.

While the fact that a lot of rich people are losing a lot of money, but we will all still be here in the morning, is treated like armgeddon. I can understand why of course, it is more news-friendly, there is a serious effect on ordinary people as well as rich companies, while the whole climate thing and the solutions are pretty complicated in a sense (but then so is macroeconomics) and of course things that effect rich people are always seen as hugely important, (which they are because rich people are more important, at least to governments they are, and I'm not being sarcastic its true) so when the Hamptons and Saint Tropez are submerged then I am sure we will get prompt action on that problem as well. :wah:

A startling piece of new I heard about one month ago: 40% of homes in Las Vegas are in foreclosure.

FORTY PERCENT!!!

cherandbuster;808584 wrote: A startling piece of new I heard about one month ago: 40% of homes in Las Vegas are in foreclosure.

FORTY PERCENT!!!




So it ain't Viva Las Vegas time then? Maybe its just a rumour, it sounds like a very high figure indeed. Then again, it is vegas.

cherandbuster;808584 wrote: A startling piece of new I heard about one month ago: 40% of homes in Las Vegas are in foreclosure.



FORTY PERCENT!!!
It's a gambling town, so what would you expect? When I lived there, I actually heard realtors on the radio say that this was the time to buy, even if you had to "overextend" just a little, because it would pay off in the long run. :yh_wait

cherandbuster: 40%????? It'll be back to desert soon!

Galbally: Just thinking, that the difference in the worlds approach to different crises is so marked isn't it?, for instance, the fact that the planet's climate is rapidly and observably destabilizing is treated as some kinda far off thing, a bad joke, or something invented by tree huggers, despite the reality which is pretty alarming. You know, little facts like the one that the ice sheet in the artic is melting more each year and will be completely gone at current rates by summer 2013, keep cropping up each month.


Chatting to a friend recently and the subject of climate change came up. There was I mentally marshalling my arguments showing that climate change is real and scary, but he was well ahead. He reckons that the industrial pollution of India and China will outweigh anything the rest of the world can do and civilisation is doomed. What shocked me is that people (if he is typical) seem to have gone from denial to despair with little or no intervening position or time!

Perhaps this is why the state of the world economy is now so important - we're going to have to spend a lot of money dealing with the effects of climate change, and that missing 1-3 trillion dollars would be very useful.

From Season 4, Episode 4. Couldn't find the video



A Message From the President of the United States

President Jimmy Carter.....Dan Aykroyd

President Jimmy Carter: Good evening. On Tuesday, we Americans will have the opportunity to exercise our role as citizens in a free democracy. Yet, only a third of the eligible voters will actually cast ballots. The other two-thirds are, in a sense, very lucky. Because they do not know what's going on.

Last week, I delivered a message on inflation. Since then, the dollar has dropped in value, the stock market has sustained record losses, and the whole sow price index increased 0.9%. In other words, our economic system is screwed, blued and tatooed! We just have to face the fact that there is simply no way to fight inflation in a capitolly-intensive, highly-technological, conflict-riddled, anything-for-a-thrill world of today. That's why, tonight, I want you to try to look for in inflation, an entirely new word: Inflation is our friend.

For example, consider this: in the year 2000, if current trends continue, the average blue-collar annual wage in this country will be $568,000. Think what this inflated world of the future will mean - most Americans will be millionaires. Everyone will feel like a bigshot. Wouldn't you like to own a $4,000 suit, and smoke a $75 cigar, drive a $600,000 car? I know I would! But what about people on fixed incomes? They have always been the true victims of inflation. That's why I will present to Congress the "Inflation Maintenance Program", whereby the U.S. Treasury will make up any inflation-caused losses to direct tax rebates to the public in cash. Then you may say, "Won't that cost a lot of money? Won't that increase the deficit?" Sure it will! But so what? We'll just print more money! We have the papers, we have the mints.. I can just call up the Bureau of Engraving and say, "Hi! This is Jimmy. Roll out some of them twenties! Print up a couple thousand sheets of those Century Notes!" Sure, all these dollars will cause even more inflation, but who cares? Everyone will be a millionaire!

In my speech last week, I said that America would have to undergo an austerity program, but since this revolutionary new approach welcomes inflation, our economy will be free to grow, and we can spend, spend, spend! I believe the watchwords for the 80's should be "Let's Party!" And in that spirit, I'd like to say, "Live, from New York, it's Saturday Night!"