Hang on tight, is it going to be a bumpy ride?
 

Dollar disappearing up its own backside.
Foreign policy borrowed from Goring's outhouse library.
OPEC mulling over pricing in Euro's & Gold at $900/oz.
Education and Employment - the working poor.
Debt, national and consumer.
Pending recession.

The Great Depression came really quite fast, the history books tell us. The scars are still with us. Can it really happen again?

Or is America so freaking BIG and powerfull, that we are effectively immune from a total disaster?






Oh, and happy Tuesday. :D

Re: Hang on tight, is it going to be a bumpy ride?
 

But don't forget the Democrats are sure to win the next election so America will once again find its feet. Well, fingers crossed anyhow! ;)

Re: Hang on tight, is it going to be a bumpy ride?
 

Oh, cheers.
Feeling much better now.
What was I worried about? :blink:

Re: Hang on tight, is it going to be a bumpy ride?
 

LOL. At least someone answered! ;)

Re: Hang on tight, is it going to be a bumpy ride?
 

No one cares.
:D

Like the song says:

"I might be going to hell in a basket - but at least I'm enjoying the ride" :eek:


Rhubarb, rhubarb.
Rhubarb.

Re: Hang on tight, is it going to be a bumpy ride?
 

I've heard they will be ordering companies to move call centers back the US. ;)

And they are going to require all cars sold in the US to be made in the US. ;)

Re: Hang on tight, is it going to be a bumpy ride?
 

Things have been much worse in days past. For example, we weathered:
- 8-9% unemployment
- 9-11% inflation
- 12-15% average mortgage interest rates
- 3 dollars to the pound
- Multi-year recessions
...circa 1977-1980 (during a Democrat's time in office ;) ).

We had another multi-year recession during 1990-91 and again (a milder one) in 1999-2000. Also, the 80s S+L crisis was much bigger than the current sub-prime mortgage meltdown. Surely things aren't so bad now.

Re: Hang on tight, is it going to be a bumpy ride?
 

It's all quite scary, eh? :(

Ultimately, I think the US will just about scathe above a total recession and through it's current [bad] economic status....the US dollar is one of the most powerful currencies in circulation....we'll get over it once Bush is out of the White House.

Re: Hang on tight, is it going to be a bumpy ride?
 

If this smacks the inefficiency and wastefulness out of the US economy (and consumer goods in particular), then it'll be a tough few years that will pay off in the long term.

Re: Hang on tight, is it going to be a bumpy ride?
 

None of those indicators means diddley. It's entirely psychological, self-fulfilling prophesy. If people believe there will be a recession, they will behave as though there is one and thereby cause one; if they don't believe it, there won't be one.

Re: Hang on tight, is it going to be a bumpy ride?
 

I agree and I really hope so.

Re: Hang on tight, is it going to be a bumpy ride?
 

Yeah, love you too!

My next door neighbor is 92 next month. He's taught me a lot about re-using aluminum foil and saving string. We're set for the next GD because he's got 2 freezers full of the preserves he (still) puts up every year!

Re: Hang on tight, is it going to be a bumpy ride?
 

hear hear to that.

Re: Hang on tight, is it going to be a bumpy ride?
 

I doubt it. The credit crisis - and credit is ultimately what grows the US economy - is real enough and not likely to go away any time soon. With banks less willing or unable to lend to businesses, the economy as a whole will feel a sting.

Re: Hang on tight, is it going to be a bumpy ride?
 

I don't know. Warren buffet is going to re-insure government bonds, two new programs to save people's ownership of their houses, Fanni May and Freddie Mac can cover much bigger jumbos. Those should make money more accessible.

Re: Hang on tight, is it going to be a bumpy ride?
 

I agree that there's a lot of wastefulness (overconsumption), but inefficiency? Can you give an example? Worker productivity is still pretty high though it's that way only because the average work week has gotten longer instead of declining.

I think it's horribly inefficient to make so many things overseas and then use up some of what's left of the fossil fuel on the planet just to get a sea of plastic Christmas blow-ups over to your next door WalMart. However, if there weren't overconsumption then that would happen less.

Re: Hang on tight, is it going to be a bumpy ride?
 

To business? Not really. And these programs to "save people's homes" are essentially a bandaid. Many people who are underwater would be better off just walking away rather than throw more $$s at a depreciating asset. As for the conforming loan limit being increased, I am unconvinced it will make a lot of difference. It may reduce interest rates on jumbos a percent or so, but how many more people will be able qualify given the gse's requirements versus income? The problem is the housing "bubble" has been built on easy credit (e.g. no doc loans where people lied about their income) and that lending environment is not going to return any time soon to any degree. Until house prices return to historic norms versus incomes and rents, housing will remain a drag on the economy.

Re: Hang on tight, is it going to be a bumpy ride?
 

To be fair, I can only come up with anecdotal ones, but if you look at the size of vehicles used by companies, the oversizing of every machine, the overemployment in the service industry and public sector, the clumsy multiple packaging, the inefficient admin systems (everything seems incredibly inefficient within companies), the psispoor banking sector, the corruption, the cost of healthcare etc etc all seem worse and more inefficient than in the better parts of Europe and Asia. (I am not highlighting the UK as a particular bright spot in this, by the way, this is not a "patriotic" observation). The agricultural subsidies are also very wasteful.

And that's leaving aside the huuuuuuuuuge amount of utter crap that people buy when they can't afford it (a massive part of the economy), and the awful attitude towards savings.

Re: Hang on tight, is it going to be a bumpy ride?
 

Bit by bit, I'm getting more frugal.
It helps that I was brought up in England in an atmosphere where things were saved for and valued. Buying on the knock was frowned on.

Its feels good and useful to not be so wastefull - as you say, economising on aluminuminum foil is one of many ways to ultimately save a few pennies.

Despite some CC debt, which is getting paid off slowly and will be gone this year. I am saving as much as possible at the mo. For various reasons, but also because if the menudo hits the fan, there will be a lot of people who are two paychecks from the poor house.

I'm also going to teach myself how to grow some fruit and veggies this summer.
May even put up an alotment shed to add to the effect.
Going to need a flat cap. :)

Re: Hang on tight, is it going to be a bumpy ride?
 

You're right. It's happened before and can certainly happen again.

Re: Hang on tight, is it going to be a bumpy ride?
 

At times like this I look to my British upbringing also. Thank you Mum and Dad :)
I may not make as much as some people....but I'm a hell of a lot better prepared for when life happens. And it will.

I say save as much as you can and get out of debt ASAP.
Then you'll be in a better position to ride it out.

Re: Hang on tight, is it going to be a bumpy ride?
 

There are many people who are zero paychecks from the poor house, but have been able to keep afloat by extracting home equity. Now that's become tougher for many, the shit really is starting to hit the fan for some folks.

Re: Hang on tight, is it going to be a bumpy ride?
 

I used to think that. But when you see the debt we're in, you begin to wonder if it can be avoided by thinking positive thoughts. We've been moving along by using home equity as an ATM machine. But that's dried up now and there's nowhere else to go.

Re: Hang on tight, is it going to be a bumpy ride?
 

Maybe it's an age thing but I've never seen the point of a home equity loan to pay for a holiday, credt card etc. As far as I'm concerned there is little to compare to owning your own home outright.

Re: Hang on tight, is it going to be a bumpy ride?
 

But you're not 'Mericun. Well you are -- but you came to it late in life as me. Reports from home seem to report the same thing happening -- though on a lesser scale.

Re: Hang on tight, is it going to be a bumpy ride?
 

How about taking a home equity loan to pay the mortgage and other bills? That's what a lot of folks have been doing.

Re: Hang on tight, is it going to be a bumpy ride?
 

Sorry that's not the way I was brought up...you do not borrow to pay of loans....if you can't pay for it you can't have it. That's what I live by and what I have (hopefully) instilled in my daughter. A mortgage is acceptable but do not borrow the max...the sooner you can pay it off the better IMHO.

Re: Hang on tight, is it going to be a bumpy ride?
 

Depends what you're borrowing it for. If it's to make more money (whether you succeed or fail), that's fine in my book. If you're buying crap with it, that's stoopid.

Re: Hang on tight, is it going to be a bumpy ride?
 

I understand the 'use money to make money' principle. But when it comes to my home I prefer to know it's bought and paid for...so if the sh*t hits the fan I have a roof over my head. Rightly or wrongly that's how I feel and no amount of financial advise will make me think othewise.

Re: Hang on tight, is it going to be a bumpy ride?
 

Americans should take heed of what the "children of the depression" have always said. The lessons they learned (at worst) are not too dissimilar from those the Germans learned in 1945.
Without the tanks.

Re: Hang on tight, is it going to be a bumpy ride?
 

JG, some people were working to your values, but they lost their jobs, used their savings, had no money for the next mortgage payment so they refied to get cash or took a home equity loan to pay the mortgage. It was a gamble to keep their equity in their home. It was that or walk away.

X. I am a child of the depression. A financial advisor looked at my portfolio and said, "It's aggressive, hell no, at your age, it's adventurous".:D

He was looking at my long term stuff, not my near term. We have no idea how long we will be around, could be a long time yet, got to cover for inflation.

Re: Hang on tight, is it going to be a bumpy ride?
 

HERE HERE!!
If you cannot afford it you cannot have it.
Too many people see something they want and they don't have to pay for it now. Living outside of their means. Spending more than they make.
No offense but how is that ever going to end well?

My mother inlaw was the perfect example.

Re: Hang on tight, is it going to be a bumpy ride?
 

I realise some people have a lot of bad luck ie job loss, healthcare costs etc so they take out a home equity loan...I'm not talking about people in that position. Many use the loan for a holiday, furniture etc...then when interest rates rise or they hit hard times they can't afford to pay it back.

Re: Hang on tight, is it going to be a bumpy ride?
 

Yes...that's exactly the way we live...and I always have,and instilled it into my sons as well...if you want something badly enough,it's worth saving for....we've got several credit cards, but rarely use them,when we got the mortgage,we knew exactly how much we wanted to pay per month,and refused to go any higher,even though the Realtor kept on at us that we could afford much more,we bought a modest little house which needed some remodelling,which my husband has been doing,and it will be paid completely this summer....it's a lovely feeling to know we don't owe anyone anything.
It's unbelieveable to know that a lot of the people who work at the prison with my husband,earning good money for this area,are literally living from one paycheck to the next...but then they've got the expensive house and both drive brand new vehicles...but that's the choice they made!
I know there are unfortunate exceptions, but I'd go crazy if we lived like that!!,I just couldn't live that way....

Re: Hang on tight, is it going to be a bumpy ride?
 

I like living frugally.. I'm no aluminum foil hoarder, but I've got by very well for someone who doesn't really have a j o b. Keep those cars paid off (did you see our new El Camino? <g>) and watch it with the credit cards. Don't go shopping for entertainment. Don't mindlessly eat out (I was guilty of this one.. that shiny thing in the kitchen is called a 'cooker'? and apparently it heats up food from raw to edible!) and rathole your money.
You never know when a great opportunity, or tragedy, will strike.

Drop me a note if you ever want to chat gardening. I don't grow too much atm, but have got lots of friends who grow a substantial amount of their groceries! Plus its fun. :)

Re: Hang on tight, is it going to be a bumpy ride?
 

As a college prof on a (half) decent wage, I could never figure out how everyone else seemed to drive brand new SUV's and watched TV on their 50 inch plasma while I was driving a piece of crap and watching TV on my 15 inch CRT. Then one of my American friends told me: "They're in debt up to their eyeballs." Me, I saved enough in 10 years to pay off my mortgage.

It seems to me that Americans need to spend less and save more. Problem is, if they do that, the economy will collapse because it's run on consumerism - if no-one is buying stuff, people will lose their jobs and then the rot sets in. As I've said before, all I know about economics, I learned from Forrest Gump.

I don't hoard aluminium foil, but I do re-use Ziploc bags (several times). :rofl:

Re: Hang on tight, is it going to be a bumpy ride?
 

Yeah but no but.... (I learned from Vicki P)

spending is okay when the purchases are wise. We do ourselves no favours by spending overseas in the quantity that we do.... also no favours by our huge military spending. We need to buy American and to do so, we need American choices. Might be more expensive but as you say, we do not need so much crap.

Re: Hang on tight, is it going to be a bumpy ride?
 

On all of the above, I think it's worth saying that although it seems like this is happening only in the US, I believe it's also happening in the UK: people have been going out, buying flash cars and holidays on credit or on the basis of unsustainable house price increases. Fine if people realize the latter is a windfall and will never come again, and if they realizing they're sacrificing that money in the future by spending it now, but if they don't...they're shagged.

I'm not sure I agree with that - protectionism always ends up backfiring where consumers end up propping up tired and inefficient domestic manufacturers. Manufacturers can't rely on selling to captive domestic markets, and we (the US) implement restrictions on imports, we'll get locked out of growing foreign markets.

Just look at the agriculture (US) and car markets (US and Australia), both of which are heavily protected for the sake of a small number of domestic companies: consumers pay more for products which are better or cheaper made overseas.

Re: Hang on tight, is it going to be a bumpy ride?
 

I saw a suggestion yesterday.. instead of buying a Chinese made flatscreen with you upcoming rebate check, spend it on services if you *must* spend it.
Get a massage, have your windows cleaned, a spring housecleaning etc

That way the money truly gets recycled into the home economy.

Re: Hang on tight, is it going to be a bumpy ride?
 

And if you really must have a flatscreen TV, Olevias are made in Ontario, CA or Industry, CA (happened to read an article about it this morning).

But I'll be saving my check (if and when I get it).

An interesting article in Time magazine:

"As customers browse among the cashmere sweaters and compact-disc players, many are having doubts not only about this month's expenditures but also about their whole philosophy of buy, buy, buy. The stock-market crash and the likelihood of an economic slowdown have rekindled the feeling that Americans must reform their spendthrift ways."

http://www.time.com/time/magazine/ar...6241-1,00.html

Oh, it's from 1987 - but much of the same applies!