Pop goes the economy

[OptimusPrime]

OBAMA'S!!!! I want it to improve today, tomorrow, next week...ASAP!! I don't want us to stay at 20% underemployment until "my guy" gets in there....there's way too many people suffering right now. We may not last until the GOP gets in there...i think a collapse is imminent unless we get something major done. It's not about WINNING for me. I'm scared as hell that this whole thing could implode at any time. For me it's about our country surviving, we are really wounded and on life support right now. If another bubble bursts, another terrorist attack happens or a major earthquake or whatever were to occur, this country can't absorbe it...it could be a knockout punch...I'm talking a run on the banks, 30% unemployment and all kinds of other evil shit. We desperatly need some stability. I pray to God that Obama comes out with somethig new and fresh on Thursday night that gets people optimistic again. Sadly, I dont think he will. I think he THINKS he's out of ammo and it will be more of the same. I think he's more concerned about re-election and doesn't want to do anything to piss off his big donors by making aggressive unpopular pro-business decisions.

Sorry for sounding depressing or paranoid. But, I think things are much worse than the gen pop realizes. I think we are literally teetering on the brink. We could come roaring back if some aggressive moves are made....but, we could collapse if nothing is done but more wasteful spending, more regulations, higher taxes and, God forbid, some unforseen other crisis.

The bubble in Treasury bills is next and will make the last bubble look like a golden age. That bubble could burst any time now as long as they keep running trillion dollar deficits and printing the money to buy those bonds, no matter who is elected president, unless it's Ron Paul and a bunch of Congressman like him. When that bubble bursts your options are:

1. Interest rates on our debt soar making our annual deficit in the $3 trillion or more range. Obviously no one is going to lend us money at that point. The nation defaults on its debt and we have the correction we have needed for years, only we propped this thing up so long that we will have a long way to fall. The Great Depression will be nothing in comparison. We desperately need it, but every day we try to prop up this failed system we are going to make the correction deeper and the recovery take longer.

2. The Federal Reserve will just buy all of the bonds, and the government will continue operating as the dollar rapidly loses value. Gas will be $7/gallon, then $10, then $50, then $1,000/gallon. People will burn their dollars for warmth in the winter. The economy will halt, but prices will not fall. No one will be able to afford to eat.

Both circumstances will result in the federal government trying to exert control over the population, taking away liberties trying to restore order. They will blame capitalism when it was their central planning that caused all of this.

 

[Brandname]

There's no doubt that's true, but if you think about what Obama's going to propose on Thursday (more spending, stimulus part II, more stagnation, temporary/meaningless tax cuts), whoever votes against it will be acting in their party's and country's interests.

Whether you think the proposals are going to be effective in helping the economy is a fine debate to have. And it's the appropriate one.

Debating whether or not we actually want to help the economy because of who the leader is, in my opinion, is not.

 

[OnTheReg]

Whether you think the proposals are going to be effective in helping the economy is a fine debate to have. And it's the appropriate one.

Debating whether or not we actually want to help the economy because of who the leader is, in my opinion, is not.

Oh, I totally agree. I wish we were booming at all times and, in fact, it's in our interest to boom at all times. However, Obama hasn't had an original economic thought in his entire life, and the only earth-shattering moment I expect tomorrow will somehow involve BJ Raji.

 

[Sock]

I'm about as far left as anyone in these political threads (though still relatively moderate), but I can't understand this line of thinking coming from anyone, regardless of party affiliation.

That's simply putting politics above the welfare of the county. It's absolutely silly. Sadly, many of our elected officials I believe have this same attitude.

Well, see the GOP not working with Obama as an example.

 

[Noonan]

I think he's more concerned about re-election and doesn't want to do anything to piss off his big donors by making aggressive unpopular pro-business decisions.

We could come roaring back if some aggressive moves are made....but, we could collapse if nothing is done but more wasteful spending, more regulations, higher taxes and, God forbid, some unforseen other crisis.

I agree Obama's concerned about his re-election and by extension getting the economy right. The better the economy, the better his chances. But his Big Donors are Big Business. What makes you think they are not?

And I'm curious how you think it is that we got into this spot. Less regulations helped fuel the housing bubble. We can all agree on that, right? So now the answer to get our economy going again is ... less regulations?

 

[OnTheReg]

I agree Obama's concerned about his re-election and by extension getting the economy right. The better the economy, the better his chances. But his Big Donors are Big Business. What makes you think they are not?

And I'm curious how you think it is that we got into this spot. Less regulations helped fuel the housing bubble. We can all agree on that, right? So now the answer to get our economy going again is ... less regulations?

It wasn't less regulation, it was inserting Fanny and Freddie into every goddamned mortgage in the land (hence guaranteeing bad investments), many of which went to people who couldn't possibly pay them back (creating bad investments). It was called The Affordable Housing act, and the whole thing was spurred by Democrats (Bawney Fwank, Chris Dodd, etc.).

If there were no regulation and the market was allowed to work, would families with a yearly income of $38,000 been given mortgages for $400,000 houses? HELL NO.

 

[OnTheReg]

Well, see the GOP not working with Obama as an example.

Why would the GOP work with a guy who hasn't had an original economic thought in his life and will be spewing more of the same drek tomorrow? The country has already tried his way (as has all of Europe, and look how fucked they are), now it's time for something new.

 

[calleger]

Well, see the GOP not working with Obama as an example.

Neither party wants to honestly co-operate with the other. That might be the weakest part of this countries Political System is the splitting on the parties.

 

[Noonan]

It wasn't less regulation, it was inserting Fanny and Freddie into every goddamned mortgage in the land (hence guaranteeing bad investments), many of which went to people who couldn't possibly pay them back (creating bad investments). It was called The Affordable Housing act, and the whole thing was spurred by Democrats (Bawney Fwank, Chris Dodd, etc.).

If there were no regulation and the market was allowed to work, would families with a yearly income of $38,000 been given mortgages for $400,000 houses? HELL NO.

This is a really solid blend of fact and fiction. Sure, the Democrats and Fannie and Freddie played a big part. But the ratings agencies, mortgage lenders, banks, insurance companies etc. all have their hands dirty.

Also, the National Affordable Housing Act was signed in 1990 by George Bush. If you're going to site specific legislation while only blaming Democrats you might want to pick your references more carefully.

 

[calleger]

It wasn't less regulation, it was inserting Fanny and Freddie into every goddamned mortgage in the land (hence guaranteeing bad investments), many of which went to people who couldn't possibly pay them back (creating bad investments). It was called The Affordable Housing act, and the whole thing was spurred by Democrats (Bawney Fwank, Chris Dodd, etc.).

If there were no regulation and the market was allowed to work, would families with a yearly income of $38,000 been given mortgages for $400,000 houses? HELL NO.

There was a time in this countries history, where banks handed out loans to fund gambling on the stock market. Seriously, buisnesses make dumb mistakes on their own all the time. Sadly, the answer to your somewhat rhetorical question is probably yes.

 

[OnTheReg]

There was a time in this countries history, where banks handed out loans to fund gambling on the stock market. Seriously, buisnesses make dumb mistakes on their own all the time. Sadly, the answer to your somewhat rhetorical question is probably yes.

Right, businesses make mistakes and should be allowed to fail. That's how a true market economy works; no bailouts, no federally backed mortgage-based securities (whatever the fuck that is), and real winners and losers. We've made this system of ours way too complicated and tried to eliminate failure from the equation. It doesn't work, as we saw, and just serves to undermine us further.

This is a really solid blend of fact and fiction. Sure, the Democrats and Fannie and Freddie played a big part. But the ratings agencies, mortgage lenders, banks, insurance companies etc. all have their hands dirty.

Also, the National Affordable Housing Act was signed in 1990 by George Bush. If you're going to site specific legislation while only blaming Democrats you might want to pick your references more carefully.

I'm not saying Republicans didn't have a hand in it when they clearly did. I will say, though, that a free-market fiscal conservative would have never gone along with whatever we think led up to the housing bubble, whereas by and large Democrats are all about giving housing to everyone and having people not pay for shit.

 

[calleger]

Right, businesses make mistakes and should be allowed to fail. That's how a true market economy works; no bailouts, no federally backed mortgage-based securities (whatever the fuck that is), and real winners and losers. We've made this system of ours way too complicated and tried to eliminate failure from the equation. It doesn't work, as we saw, and just serves to undermine us further.

I'm not saying Republicans didn't have a hand in it when they clearly did. I will say, though, that a free-market fiscal conservative would have never gone along with whatever we think led up to the housing bubble, whereas by and large Democrats are all about giving housing to everyone and having people not pay for shit.

I guess you missed what I was talking about.

making valued goods. Throughout the twentieth century, most of the capital in the United States was represented by stocks. A corporation owned capital. Ownership of the corporation in turn took the form of shares of stock. Each share of stock represented a proportionate share of the corporation. The stocks were bought and sold on stock exchanges, of which the most important was the New York Stock Exchange located on Wall Street in Manhattan.

Throughout the 1920s a long boom took stock prices to peaks never before seen. From 1920 to 1929 stocks more than quadrupled in value. Many investors became convinced that stocks were a sure thing and borrowed heavily to invest more money in the market.

But in 1929, the bubble burst and stocks started down an even more precipitous cliff. In 1932 and 1933, they hit bottom, down about 80% from their highs in the late 1920s. This had sharp effects on the economy. Demand for goods declined because people felt poor because of their losses in the stock market. New investment could not be financed through the sale of stock, because no one would buy the new stock.

But perhaps the most important effect was chaos in the banking system as banks tried to collect on loans made to stockmarket investors whose holdings were now worth little or nothing at all. Worse, many banks had themselves invested depositors' money in the stockmarket. When word spread that banks' assets contained huge uncollectable loans and almost worthless stock certificates, depositors rushed to withdraw their savings. Unable to raise fresh funds from the Federal Reserve System, banks began failing by the hundreds in 1932 and 1933.

By the inauguration of Franklin D. Roosevelt as president in March 1933, the banking system of the United States had largely ceased to function. Depositors had seen $140 billion disappear when their banks failed. Businesses could not get credit for inventory. Checks could not be used for payments because no one knew which checks were worthless and which were sound.

http://www.pbs.org/fmc/timeline/estockmktcrash.htm

 

[Noonan]

I will say, though, that a free-market fiscal conservative would have never gone along with whatever we think led up to the housing bubble, whereas by and large Democrats are all about giving housing to everyone and having people not pay for shit.

Wrong:

We're creating an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property. - President George W. Bush, October 2004

The amazing part is that earlier you asked "if there were no regulation and the market was allowed to work, would families with a yearly income of $38,000 been given mortgages for $400,000 houses?" That's exactly what happened. What you asked isn't even a hypothetical. We just went through it.

 

[OnTheReg]

I guess you missed what I was talking about.



http://www.pbs.org/fmc/timeline/estockmktcrash.htm

I understood it just fine. Banks made shitty investments and shitty loans, hence they failed. Through this failure, they learned not to do that again.

This time around, though, we didn't let the banks fail (hence incentivizing bad/risky behavior) and haven't really done anything to rectify past mistakes.

 

[calleger]

I understood it just fine. Banks made shitty investments and shitty loans, hence they failed. Through this failure, they learned not to do that again.

This time around, though, we didn't let the banks fail (hence incentivizing bad/risky behavior) and haven't really done anything to rectify past mistakes.

The goverment didn't save all banks. Major players in the economy were spared.

But if the begining of the Great Depression is a needed & necessary correction to the market. So be it.