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  1. #1
    What's the word? Rhia7's Avatar
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    A Silent Depression?
    According to a CNNMoney.com poll 60% of Americans believe a depression could be possible
    Poll: 60% say depression 'likely'

    Depression economics from the Financial Times

    [snip]
    The devastation won’t be due to a crisis, it will be only heightened by a crisis. The real devastation will be due to the transfer of wealth and jobs overseas. It will be a silent depression.
    [snip]
    Instead of massive unemployment, we will see significant unemployment combined with massive underemployment.
    [snip]
    In a few years, the real estate and banking crisis will have cooled off and Washington will start reporting much improved numbers; numbers that will continue to be manipulated. In reality, things will only get worse. Real wages won’t budge, inflation for basic necessities will remain high and most likely be higher, and job quality will continue to decline.

    [source]
    Check out the pictures of the global food crisis that hasn't been solved yet:
    Global Food Crisis Picture Gallery
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  2. #2
    ABW Ambassador Boom or Bust's Avatar
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    I've come to have little confidence in poles, and don't find much value in ones that seek simply "what people think". IMO such poles serve only to perpetuate negativity and fear. Not that I turn a blind eye to the truth of current difficulties, I'd rather look at the facts than contemplate peoples opinions.



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  3. #3
    Full Member Greywolf's Avatar
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    ...and in another poll, 75% couldn't define a depression in actual economic terms.

    Truth is, we have not even reached recession level yet, which would be two consecutive quarters of negative growth.

    *Politicalcentric comment removed*
    Last edited by Ed Byerly; October 12th, 2008 at 02:18 AM.

  4. #4
    What's the word? Rhia7's Avatar
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    Quote Originally Posted by Greywolf
    ...and in another poll, 75% couldn't define a depression in actual economic terms.

    Truth is, we have not even reached recession level yet, which would be two consecutive quarters of negative growth.

    *Politicalcentric comment removed*
    I appreciated your post.
    We can't get too political on this forum but your last line gave me a chuckle

    I certainly hope there will be no depression: either an overt one or silent.

    As for recession, I think we are in one.

    I would like to read the article from the Financial Times but in order to read the full article, one has to subscribe.

    The food crisis is not an opinion -- it would be good to have a humanitarian effort to solve that because what goes around comes around.
    Last edited by Ed Byerly; October 12th, 2008 at 02:18 AM.
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  5. #5
    What's the word? Rhia7's Avatar
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    Ben S. Bernanke & The Macroeconomics of the Great Depression
    An interesting page dealing with macroeconomics and depression was updated was last updated on 2008-10-11.

    Check out The Macroeconomics of the Great Depression: A Comparative Approach

    You can download Bernanke's paper. There are links to other research on the topic.
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  6. #6
    Full Member Greywolf's Avatar
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    I agree, the economy is probably receding as I write this. My point was more from an economics and historical perspective. The media, and politicians (when they are trying to bash the other party), will frequently throw around the R word. The reality is that the U.S. economy has only experienced 10 recessions since 1945, with the average duration being 10 months. Last one was 01-03.

    So officially no recession since 03, but how often do you hear politicians or media say the economy is bad? I think it's the same phenomenon as how they report on the war; if it's bad news, then it's news. I can hardly find any stories on Iraq since things improved last year.

    We will pull out of this, and the economy will experience strong growth again. We just need to keep level heads on not make the problems out to be more than they are.

    Hope that wasn't too political

  7. #7
    Visual Artist & ABW Ambassador lostdeviant's Avatar
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    There are people who are hungry or lack other basic goods even in the strongest of economies.

  8. #8
    Full Member Greywolf's Avatar
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    True. Best way to feed them is to provide them the opportunity to earn a living, which I think we have in this country. The American people are also extremely charitable, which helps cover those that can't provide for themselves due to illness, disability, or whatever.

    The food crisis is not an opinion -- it would be good to have a humanitarian effort to solve that because what goes around comes around.
    Charity comes from the individual, not government confiscation at the point of the gun, and there are dozens, probably hundreds, of private charitable organizations whose mission is to feed people. Everyone donating to their favorite charity is the best way to help.

  9. #9
    Full Member Greywolf's Avatar
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    Credit Still Out there
    Rhia7,

    You might enjoy this article

    http://cato.org/pub_display.php?pub_id=9685

    Great story in Cato which explains in specific terms, not hyperbole, that the credit markets have NOT dried up, contrary to what nearly every talking head will parrot.

    Now if your looking for a subprime home loan, or want to trade in your negative equity F350 with a 250 FICO score, then you are probably SOL.

    Bottom line, banks are still lending money.

    GW

  10. #10
    What's the word? Rhia7's Avatar
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    Cato Institute has a great economic site that really inspires one to think.
    Thanks for the link.

    I don't deny that there is still money available to lend but the terms most likely have changed. When you see the term "qualified buyer" what exactly are the qualifications?

    I read somewhere in a previous article that we can expect more junkers on the road because leasing arrangements won't be as easily offered.

    "Terms tougher, but loans available"
    http://www.ohio.com/business/30857814.html

    An interesting nugget from the Financial Times is:
    "A bill signed into law sets aside $25bn in low-interest loans that can be used to meet more stringent fuel-efficiency requirements."
    http://tinyurl.com/4wyopf

    Mortgages are more difficult to get as pointed out by the Market Watch of the Wall Street Journal:
    Some home sellers are lenders too
    "CHICAGO (MarketWatch) -- It's much harder to get a mortgage today than it was a couple of years ago. That's why some home sellers are stepping in and financing deals on their own. "

    It's a low-baller's paradise out there.
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  11. #11
    Full Member Greywolf's Avatar
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    Concerning secured loans (cars, homes, boats), you'll probably still have some sort of market for subprime type loans, because there is money in it.

    The problem Lehman, Fannie, and many others ran into is that too much of their portfolio was subprime. So subprime will still exist, just at more reasonable exposure rates.

    More used cars on the road, probably. If you can't pay cash, probably don't need it that bad.

  12. #12
    What's the word? Rhia7's Avatar
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    Exploring the worst-case scenario
    http://www.cnbc.com/id/27150344/for/cnbc/

    "With no desire to exaggerate, this might be considered the financial pre-conditions of a depression," Citigroup economist Steven Wieting wrote in a note to clients.
    This slump is becoming more democratic than the milder downturns since the early 1980s. September sales at BMW and Mercedes-Benz dealerships plunged compared with a year ago, suggesting even wealthy Americans are gulping at the scope of the financial crisis.

    Just as bad for the industry as the dismal monthly sales results is the almost total uncertainty about the outlook.
    Industry Slump May Benefit The Auto Makers That Survive
    The United States economy has already entered a recession, and the global economy as a whole is in real danger of entering one, warns Gregory Peters, global head of fixed income at Morgan Stanley. New York-based Peters says that major indicators in the US already suggest the world's biggest economy has entered a recession, and with the contagion spreading to Europe and Asia, the global economy will inevitably slip into one.
    US in recession, global economy moving closer
    Stephen King: Lessons from the Great Depression of the 1930s have not been learnt
    http://www.independent.co.uk/news/bu...nt-959408.html
    Last edited by Rhia7; October 12th, 2008 at 09:14 PM.
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  13. #13
    Full Member Greywolf's Avatar
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    ah yes, we NEED world leaders to solve the crisis.

    Best thing that they could do, they won't. What is it you say? Cut taxes drastically. Cut the corporate tax, cut the capital gains tax, cut personal income taxes. Do this, and the economy will explode with growth.

    They won't do it though, because it will cause them to relinquish power and realize the free market is our savior, not government.

    GW

  14. #14
    What's the word? Rhia7's Avatar
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    What will happen to the Bond Market?
    This article makes a good point about the fact that neither falling stock markets nor falling housing markets "contract the money supply."

    The government’s bailouts and “liquidity” injections on the other hand increase it. John Williams shows at shadowstats.com that the money supply is expanding at 14% and when the government guarantees all bank deposits and probably all interbank lending I can’t imagine what it will be!
    Bond Market Collapse is Imminent

    The co-director of the Center for Economic and Policy Research, in Washington, D.C. with a Ph.D. in economics from the University of Michigan, Mark Weisbrot, has written an article for the Center for Economic and Policy Research entitled Wall Street Bailout Won’t Do Much to Help Ailing Economy

    England is having a tough time too. Here's a recent article in the guardian.co.uk:
    * Business * Recession Two million Britons on the dole by Christmas
    Downing Street's desperate efforts to shore up the economy in the face of the escalating credit crash may not be enough to rescue the transport, building and car industries, as a tidal wave of job losses are predicted in the coming months
    The crisis in the UK sounds similar to ours.


    Two More Banks Closed by Regulators
    http://money.aol.com/news/articles/_...371x1200675175

    Bank closings are not good.


    As the spectre of a long and painful recession looms ever larger across the globe, it is troubling to note that these dual problems facing governments across America - falling tax revenue and reduced access to debt - are universal. Brace yourselves for another great American export.
    America's latest export: empty municipal coffers
    Last edited by Rhia7; October 12th, 2008 at 09:53 PM.
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  15. #15
    What's the word? Rhia7's Avatar
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    Quote Originally Posted by Greywolf
    They won't do it though, because it will cause them to relinquish power and realize the free market is our savior, not government.
    Where has there been a totally free market economy without government intervention?
    There needs to be some regulations.

    I don't understand your following quote:
    Quote Originally Posted by Greywolf
    More used cars on the road, probably. If you can't pay cash [i.e. for a car], probably don't need it that bad.
    What if someone needs a reliable car for a job but does not have the cash or does not have excellent credit?
    Last edited by Rhia7; October 12th, 2008 at 10:15 PM.
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  16. #16
    Full Member Greywolf's Avatar
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    In my opinion (and that of the founding fathers) , governments role should be enforcement of contracts, and to protect people from being harmed by others through the law.

    This doesn't mean regulation that tries to prevent people from losing money, having their home reposesed, or from harm they cause themselves.

    Generally speaking, regulation is a tax on business. Meaning it is an expense for businesses to comply with regulation. Less regulation means more money to put towards productive enterprises.

    My point in my previous post is that all of the solutions being enacted or proposed involve inflating our currency through further national debt.

    Only the free market will pull us out of this. Govt should enact business and free market friendly policies. Supply side economics actually does work.

    It is possible to live without credit. Millions of people are actually doing it. There are a lot of reliable $1500 cars out there. If you can't afford that, you could take public transport, ride a bike, etc.

    If your grandparents or great grandparents are alive, ask them if they took out car loans when they were in theiri 20s and 30s.

  17. #17
    What's the word? Rhia7's Avatar
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    I say bring back The Glass-Steagall Act.
    The Glass-Steagall Act separated investment and commercial banking activities; if this had not been repealed in 1999 we would not be facing the problems we are facing today.

    http://www.investopedia.com/articles...603.asp?Page=1

    That's a non-political link
    It's also non-affiliate
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  18. #18
    What's the word? Rhia7's Avatar
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    This is what is happening in the UK; the story is similar in the US:

    Signs of recession: the impact on Britain's real economy
    http://www.guardian.co.uk/business/2...s-creditcrunch

    Will things go deeper than that? I hope not


    On the flip side there will be bargains out there if someone has the cash.
    [Not everyone will have the cash]
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  19. #19
    Full Member Greywolf's Avatar
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    I'd also say repeal the CRA.

    The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law designed to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.
    What it did was encourage lenders to make loans they wouldn't normally make, essentially sub prime loans.

  20. #20
    What's the word? Rhia7's Avatar
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    Quote Originally Posted by Greywolf
    I'd also say repeal the CRA.
    What it did was encourage lenders to make loans they wouldn't normally make, essentially sub prime loans.
    It should be called the CRAP

    This sounds like Orwell's doublespeak [from 1984 ]: "... encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities ..."

    Commercial banks and savings associations did it the Drexel Burnham way
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  21. #21
    What's the word? Rhia7's Avatar
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    Short-Sellers: Unfairly Targeted in the Market Crisis?
    Short-Sellers: Unfairly Targeted in the Market Crisis?
    http://www.businessweek.com/investor...gn_id=rss_null
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  22. #22
    What's the word? Rhia7's Avatar
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    The New Age of Frugality
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  23. #23
    MasterMike HardwareGeek's Avatar
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    everyone is making a big deal out of nothing.

    Anyone notice the value of their dollar go up and gas prices dropping?

    last i checked the dollar going down and gas prices going up were the cause of the bad economy, now its the other way around.

    I saw gas here in NYC as low as 3.10 today feeling like it will be in the 2 dollar range soon

  24. #24
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    In the past few week, anybody with stocks, mutual funds, pension funds, and property anywhere in the world would have seen their net worth declined substantially. Of course, the immediately decline in stocks is apparently, but it is the effect on property that will even be more damaging. For example, the asking prices for property in our city have suddenly dropped by 20$.

    This massive wealth destruction is bound to have an effect on consumer spending everywhere. Even those who do not hold stocks or property will be threatened by the prospects of layoffs. Therefore any discussion of whether there will be a recession or not is academic. Even if there is no official recession, it will still feel very unpleasant. The most important thing to do in a time like this would be to make sure that you have a steady income to get through anything that may come.

  25. #25
    Member JeremyHFSykes's Avatar
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    I took an unbiased, independent poll of three people. The three people that I polled were good friends; me, myself and I. It was close but there was a split decision. two said it is ALREADY the beginning of a depression. The other one said who the heck are you guys and why do you both look like me. :-)

    p.s. It is really bad out there. I hate to be rude but "F" the fact that the market is "rebounding" so strongly today. WHATEVER! That means exactly what to me right now? That if it stays strong for another year we might still be in a recession-like state. Seriously . . . . God help us all!

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