basic economic question

[mthieme]

Re: basic economic question

I could back as far as Katrina which of course is just a tad over two years now when things really started getting out of hand...and has not stopped since.

Obviously we can't go back over decades. But I'm sure some CPA could the make the numbers go either way.

 

[QC]

Re: basic economic question

I just don't think "things" are as bleak as cherry picking a few commodities might indicate . . . Not trying to pick a fight, but Unemployment is not that bad, in fact it is better than many many years that were considered to be "good". Interest rates are low. Housing is off, yes, but that only matters if you are selling or borrowing more. Gasoline (oil) is finally in line with inflation. Natural Gas is low, many many things are very cheap in comparison. Yes, auto parts, TVs, all electronics, computers, cars etc. Food is up, but that is tied to fuel, and I believe more in line with inflation than some recent spikes might indicate. Wages have risen steadily above inflation I believe. And yes, I am sure you could find some accountant that could make all of the numbers look bad, or one that could make all of the numbers look good. Which is also my point . . .

 

[Uraijit]

Re: basic economic question

Interest rates are ARTIFICIALLY low.

Stocks are in a free-fall. Banks are failing like crazy. Unemployment is rising (nearly double what it was last year, here in Utah)...

It's only the beginning.

 

[mthieme]

Re: basic economic question

Well, could be that you're personal finances are more comfortable than mine.
I make a decent salary, but the bank account ain't exactly indicating a boon - it's half what it was when the year started. Spending habits have not changed - maybe tightened a little if anything. My wife calls me cheap, I consider myself on the conservative side when it comes to spending. (maybe this has something to do with
I'm just saying that things have been going up significantly in the past two years and my wallet is starting to feel the pinch.
Whether these are due to inflation, oil, money grubbing corporations, whatever. I really don't care about the cause(s) as I have little control over these matters. Well, I care, but I don't fret over the causes.

I know you're not picking a fight. Matter of fact, I enjoy the debate. It's like having an ear to bend if nothing else. There's always a good debate going on in iBoats which I consider it a positive thing. I think it's a healthy thing to get over viewpoints even if contradictory to your own.
But just think what would happen, if this crowd were face to face in the same and got going....might not be pretty!

 

[thefairlaneman]

Re: basic economic question

From the way things look right now I would advise serious caution to anyone wanting to borrow large money and to protect your credit for future needs at all cost. Conserve and cut back on extras. Dont sign any contracts you can avoid also.And dont forget no matter what the economy is doing ALL so called financial advisers will say alls well and to let them handle your money.NO WAY

 

[Kiwi Phil]

Re: basic economic question

Can't disagree with the comments here.

The bottom line here is consumption.
Those countries smart enough to produce and export more than they consume do well....they lend their surplus to the others.
America use to be the best in the world at doing this.

I read comments about the importance of 'credit rating', and I really have to ask the question, why do you need credit in the 1st place....if you can't afford something, then why borrow to buy it??
Does it not make sence to wait, save, then go buy it.??

30 yrs back my father said to me:
"who do you think is the wealthiest man in this street?"
my answer is erelevant.
"no, its the man who owns everything and has no debt".

I hear people say how valuable an asset their house is.........that is absolute B/S....a house is possibly the worst possible investment you can make.
Thats why investment house don't own them.

BUT, a house with a diminishing mortgage becomes the corner-stone of the family, because as rents increase, incomes increase, the costs of paying off the house becomes a lesser % of the family income, increasing the families disposable income.

The value of the house is a B/S figure.
The mortgage is the critical figure.

So what do the some people do.....goodness, my house has doubled in value, I will go out and increase my mortgage so we can have 'extras'.

THAT IS THE FOUNDATION TO TODAYS PROBLEMS.

I have a family member......an IL.....not a bad bloke really, but after 20 yrs of home ownership (5 different homes) he is the proud owner of a mortgage 5.5 times larger than his 1st mortgage, and his equity is 5% in it compared to 25% in his 1st home.
For yrs, they increased their mortgage to pay off their credit cards for nice clothes, meals out, and 'toys'.

ANOTHER FOUNDATION TO TODAYS PROBLEMS

The simple solution is:
do not borrow money to consume
reduce your mortgage as quickly as you possibly can.
Increase your disposable income, not the Financial advisers.

Sorry for the rant....just my views.

Cheers
Phillip

 

[SgtMaj]

Re: basic economic question

The bottom line here is consumption.
Those countries smart enough to produce and export more than they consume do well....they lend their surplus to the others.
America use to be the best in the world at doing this.

I couldn't agree more with that. In fact, America was beginning to slip a bit before the computer age, but that made us so much more productive. The real bottom line is that if we want back on top (and make no mistake, we are not on top anymore), we either have to consume less, or produce even more.

I personally think there is a lot of room for us to produce more. It wasn't so long ago that people planted fruit trees instead of ornamental trees, and had home gardens to produce some of their own food, or ran a wood shop out of the garage, etc... today, how many people do you know that produce ANYTHING outside their normal working hours? Ok, so a lot of us here do... because we repair boats, etc... Think about the typical gen X and Y person though... outside of their job, they only consume. They go home to watch T.V. or play video games all night... or go out drinking at the pubs. They are completely unproductive outside of work.

 

[tdglau]

Re: basic economic question

There is one thing that I have not seen here, that is the speculation and I am thinking this is going to happen soon. What happens if these companies that the federal giverment is bailing out just decide to not repay. Like a bad brother in law the feds are now married into the whole family whether they like it or not, and like a bad brother in law, they are not going to pay it off. All said in done the feds are now the largest privately owned lending institution in the U.S. What happens if they want to infringe on some other laws tommorrow. What if they come up next week and say, no one who is under 5'10" can get a mortage now, and this are where we want everyone with green eyes to live. Sounds far fetched to us now, but remember it took Adolf Hitler about 9 years to screw Germany out of 1000 years of an otherwise proud history.

 

[thefairlaneman]

Re: basic economic question

The problem I have with the whole thing about the fed bail out is that something this serious that has taken this long to get this bad ALL OF A SUDDEN HAS TO BE SOLVED ONLY DAYS BEFORE A MAJOIR ELECTION. I smell something fishy but respect the rule of not making any polictical comment here.

 

[snapperbait]

Re: basic economic question

It's a little late now, but still, buy gold.... Or....Invest in canned food and shotguns...