Major Economic Dislocation

[Theben]

Isn't Schiff the one who always declares a recession given any set of economic numbers? He just got right twice a day.

[Lancer]

I'm in pesos, for security.

[Dinner]

Originally posted by DanS
The second part of the mortgage problem?

http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml

[Kidlicious]

Originally posted by Oncle Boris
Leftist economists and intellectuals are clamoring all over the place that the crisis was caused by the increasing disparity between the wealthy and the working class.

Too much capital (relative to GDP) -> speculative bubble -> working class has to borrow to fuel consumption and buy a house -> until they are unsolvable.

What do you guys think?

What Leftist economists? Maybe they aren't Marxists. Credit and derivatives are inventions to increase the disparity between the wealthy and the working class. They keep the capitalist economy functioning. They didn't cause a crisis. They prevented one.

[DarkCloud]

Originally posted by notyoueither
Let me get this straight. You think the market is about to plunge, but you are investing in it. Do I have that right?

I would venture to say that American consumers have nothing on you. You go, girl!

Hmm... Investing in late Jan/ mid Feb. Perhaps that wasn't clear. That would be after the plunge.

[notyoueither]

Originally posted by DanS

What does that mean, specifically? Lower interest payments on the debt that is already taken out will no doubt lower the burden on consumers who are jacked and unjacked. This is just a matter of mathematics. People will probably save a little bit more with the reduced debt servicing burden.

Yes, I assume they will. I've read they've already started.

The point is far fewer people spending because they either can't or won't.

What remains to be seen is how much less.

Yes, employers will have to adjust to a new reality where people are saving more. Why is that particularly scary?

The saving part is good. It'll be the sudden lack of spending. Combine that with capital markets that are sick and not functioning normally. Then the ranks of the unemployed swell, leading to even less spending. Then a few more banks fail because of the turmoil piled on top of the other crap, leading to even less spending. Then...

Dauphin asked if I was envisioning a perfect storm. I guess I am because the OP assumes the factors piling one on top of the other to create an event with much greater energy than normally would be seen.

At bottom, it is my sense that too many things are going wrong in too many places all at the same time for this to be a mild or moderate downturn.

[One_more_turn]

Obama's 1 trillion stimulus will somewhat lessen the pain.

I predict that sometime next year the US government will officially start buying foreclosed properties and excess housing inventories.

Our current Federal Reserve and Treasury Department have already broken every imaginable rules of a "free market" economy.

How our future shapes up will depend on where the stimulus money is being used and whether we have learned any lessons from this whole debacle.

[One_more_turn]

Originally posted by Theben
Isn't Schiff the one who always declares a recession given any set of economic numbers? He just got right twice a day.

I'm both amused and appalled by people like him.

They always wish other people to suffer for some kind of their "sins".

But I guess that's the same attitude serial killers possess.

[notyoueither]

Originally posted by One_more_turn
Obama's 1 trillion stimulus will somewhat lessen the pain.

I predict that sometime next year the US government will officially start buying foreclosed properties and excess housing inventories.

Our current Federal Reserve and Treasury Department have already broken every imaginable rules of a "free market" economy.

How our future shapes up will depend on where the stimulus money is being used and whether we have learned any lessons from this whole debacle.

Some people might say that the US government's actions will increase, or lengthen the pain.

[One_more_turn]

Originally posted by notyoueither


Some people might say that the US government's actions will increase, or lengthen the pain.

That's the same group of people who wanted to liquidate stocks, liquidate real estate, and liquidate farms during the Great Depression.

The Libertarian tradition is strong in this country. But what they don't understand is that our society has long passed the point of no return, a collapse is not an option anymore.

[notyoueither]

That's the same group of people who wanted to liquidate stocks, liquidate real estate, and liquidate farms during the Great Depression.

I think most of those guys are dead and buried. I don't think many of them have opinions on current events.

[One_more_turn]

Originally posted by notyoueither
I think most of those guys are dead and buried. I don't think many of them have opinions on current events.

You misunderstood my point. These people have the same attitude or mindset as their liquidationist predecessors.

[notyoueither]

Or maybe they've studied the effects of public policy and programs during the Dirty Thirties and done something radical, like learned from the past.

[notyoueither]

I'm not advocating the government doing nothing, btw.

However, the $350 bln seems largely flushed, depending on who you read, other than DanS.

[One_more_turn]

Originally posted by notyoueither
I'm not advocating the government doing nothing, btw.

However, the $350 bln seems largely flushed, depending on who you read, other than DanS.

I wouldn't say flushed. This $350 billion has prevented a collapse of the entire US financial system. The latest Fed statistic shows that our banks have finally become solvent since Dec 2007.

Of course, this money does nothing to stimulate the economy or created jobs. That's up to our new prez.

The establishment's intention has been quite obvious throughout the entire crisis:

1. Nominate someone who understands the Great Depression as Fed chairman when the housing collapse seemed inevitable. (Jan 2006)

2. Put someone who understands Wall Street as Treasury Secretary to replace that clueless and ineffective John Snow. (Oct 2006)

3. Bail out Bear Stearn because Fed was not ready at that point.

4. Implement a modest stimulus package ($150 billion) to delay the systemic meltdown until fall or even after the election.

5. Let Lehman fail to mess up European banks and emerging economies, crushing commodity prices and inflation in the process.

6. The ensuing market panic forced the US Congress to give Federal Reserve the green light for quantitative easing (printing money), it also gave Paulson the authority to save his friends (TARP).

7. The resulting economic dislocation allowed Democrats to seize power, and to implement a strategic realignment of the entire US economy.

8. With the entire world in deflation and US Dollar strong, stimulus packages are easy sell and can actually achieve some useful results.

9. The Fed and its cronies will be able to seize lots of cheap assets around the world and make a killing during the next boom. Imagine that, trillions of cash in a deflationary environment!