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Old 04-13-2008, 06:34 PM   #21
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Its just the way they figure it out
Yeah, you said a mouthful there. I'll leave it at that.
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Old 04-13-2008, 06:49 PM   #22
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Yeah.. one might almost buy into it if George Will actually did some MANUAL LABOR, or produced anything himself other than self-satisfied blather about politics and baseball.

I'd think he's spent more than a few "protracted golden years of idleness" behind home plate, or in someone's SkyBox.

He's metastasized himself. The bow tie is a common "punditonoma" excrescense. Tucker Carlson has an early manifestation thereof.. probably too late for Will, but I hope Tucker seeks help in time, now that he's behind Alberto Gonzales in the unemployment line and has plenty of opportunity to seek treatment.
Not a fan I take it
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Old 04-13-2008, 07:05 PM   #23
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Ladelfina are you really arguing with Will's main point that the economy in an election year is always in headed toward a disaster. IIRC objectively the economy in 1984 and 1996 were both in pretty good shape, unless you listened to Walter Mondale, and Bob
Dole. They argued that economy numbers masked deep hidden problems thanks to the incompetent administration and doom gloom would soon be here. The American people thought differently and reelected the President.
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Old 04-13-2008, 09:54 PM   #24
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clif, .. Clinton was no saint and did many things I disagree with.. but balancing the budget was not one of those. Mondale and Dole may well have been pointing to the structural weaknesses we see now (which were neither created nor necessarily ameliorated by Clinton). I would have to go back and check out their specific arguments.

When I look at Democrat and Republican, I see the Democrats as unfortunately amorphous, but at least willing to experiment. I see the Republicans as clinging to the hoary supply-side fantasies of Reagan (which, if you look at Reagan's real record you will see him as less than absolute -- he raised taxes, baby, yes indeedy).

If you look beyond the election cycles.. current doomsayers pinpoint the beginning of the current recession either in the dot-com bubble recession (presided over by Bush but the run-up under Clinton).. or a dirittura beginning during the Reagan years!

Remember even Bush the First decried "voodoo economics"!?

What's becoming clear with all these recent Fed machinations.. is that things can somewhat be pushed/pulled/staved off.. by the admin. and the powers that be. They are holding on with their fingernails right now to get the full brunt of the current crisis to hit under the next admin., whoever may be at the helm. Remember, W is preoccupied with "legacy" (allow me to laugh heartily yet bitterly).

The fact that the media exposure of the economy's being a disaster happens to fall in an "election year".. well, that's a convenient TV-pundit-type excuse.. supposedly "significant" elections happen every two years. Terror alerts happen to come up every two years just before elections nowadays, too.... Economic cycles take longer than two years to play out, though, especially the systemic kind that we are seeing.

--------------------------------
I loathe the current occupant of the WH, but if someone had asked me in 2000 whether the US economy were in terrible shape, I probably would have said "not really". If someone asked me in 2004: probably, "not really"... (I mean, I know: deficit bad, war spending bad..who will pay? etc. ... but it was all abstract.) This because I had a paid-off house, no tech stocks, and was not paying attention.

What I have been reading lately gives me a new perspective: what we have seen is UNPRECEDENTED leverage.. UNPRECEDENTED Fed interventions.. crazy private bailouts happening over the weekend with unregulated mystery collateral that will be forever(?) SECRET.. the G7 meeting 'unofficially'(?) and convening the heads of all the Investment Banks..

The public, mediatical, face of it all has a bit of worry, but also lots of soothing. Thank God i'm not exposed to it 24/7, but the irritation here on the board seems to be because there's a minority gloom contingency, any gloom whatsoever.. when what irritates ME is the majority bull contingency, for which I see no rational basis at this point in time.

The way I see it (and I try to hammer this into Right-Wing MBA Sis' head to no avail..):

1.) the USA actually produces ever less and less on an historical basis, yet personally and as a country we are more and more in debt (Cheney: "deficits don't matter")

2.) some measure of increased 'product' was booked during the dot com years.. some of this was actually productive, but the majority not. When that became obvious: recession.

3.) Then people looked for new places to invest, and with low interest rates homes became attractive. So did other debt-backed spending. The gov. measures that were supposed to spur lending and convenience for business did so in spades for consumers. This despite the fact that consumers were borrowing not only to make steps up "the ladder".. but felt they needed to borrow just to keep even with the TRUE Cost of Living.

4.) GDP kept increasing, but only because of the bloat in home "values", mortgages and consumer credit. "Financial services" became 40% of GDP, I believe.. and consumer-related GDP 70%. This was also somehow "productive"... in the way that if I have to pay for pointless packaging, that's productive.. and so is the garbage service that hauls it away.. and so is the space taken up in the landfill... all positive!! There's NEVER a downside! Huzzah! House-swapping, mortage-selling, house-financing became ever more of GDP.

5.) Unnaturally low interest rates meant people could afford "more" house on the same monthly payment. So housing prices rose to meet that threshold.. which was itself further distorted through fraud, wishful thinking, and the fact that banks and mortgage brokers kept making points and commissions on the fervid churn.

6.) But we were "rich"!! The assets on paper were as phenomenal as they were fake.

7., 8., 9., 10.) Plus all the other fun stuff like under-reported real CPI.. under-reported real joblessness (not unemployment measured by who actually signs up for immediate benefits.. JOBLESSness... more than double the unemployment figures).. then ever more people w/o health ins., health ins. covering less and less despite often double-digit premium increases.. now gas doubles in price, now food doubles in price.


Somehow, this all worked great and people were supposedly happy until someone balked. The goat. The Charlie Brown of the faccenda. "Ya know... I'm not suuuure that house is really worth $1.2 million.. 15+x my annual salary"... or .. "ya know, I'm not suuure your AAA-rated MBS/CDO/CLO is really all that and a bag of chips".

Real wages are where they were in the 1970s. The consumer can no longer be counted on to pull the economy forward. The fact that they did for 30 years is due to increased indebtedness otherwise known as reduced solvency. There's no more blood in this turnip.

AUUUUGGGGGHHH!!
Lucy yanked the football away.
WHOMP!

------------------
What's happening now is that:
- housing will continue to go down in most areas for a while (10-20% min. from here)
- foreclosures will continue to rise (unless artificially halted by wrong-headed bi-partisan legislation)
- credit will remain frozen or at best sclerotic for who knows how long
- HELOCS, then commercial real estate will be seen as following the same trends as mortgages (commercial vacancies are huge in many places), putting MORE pressure on banks. We haven't seen this hit yet.
- municipalities will have serious problems due to drastically reduced prop. tax base; some are already on the verge of BK, others will raise prop. taxes to the point of real pain and possible revolt. Oh, will they be able to meet their muni bond obligations? Who knows?
-People have already stopped spending, generally speaking. Which leads to less store traffic, and more empty CRE in a downward spiral. Still more service-job layoffs and thus still more potential foreclosures.

I fear deflation/depression.

Obviously I don't/can't follow the full US media panoply. But I get wind that it's Very Very Very Serious to talk about Obama drinking juice rather than coffee. And that the pres. being directly involved with torture talks doesn't matter, but Obama noting that some people are "bitter" could Rend the Country Asunder.

I fear deflation/depression, not because of the current occupant of the WH exclusively, but because of the "all-gain/no-pain" supply-side fantasies this admin. assiduously harbored, whereby cutting taxes supposedly increased tax revenue. And where excessive stimulus rate cuts never had any down side.

Don't forget the most prophetic comment of the Bush era:

Quote:
In the summer of 2002, after I had written an article in Esquire that the White House didn't like about Bush's former communications director, Karen Hughes, I had a meeting with a senior adviser to Bush. He expressed the White House's displeasure, and then he told me something that at the time I didn't fully comprehend -- but which I now believe gets to the very heart of the Bush presidency.

The aide said that guys like me were ''in what we call the reality-based community,'' which he defined as people who ''believe that solutions emerge from your judicious study of discernible reality.'' I nodded and murmured something about enlightenment principles and empiricism. He cut me off. ''That's not the way the world really works anymore,'' he continued. ''We're an empire now, and when we act, we create our own reality. And while you're studying that reality -- judiciously, as you will -- we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors . . . and you, all of you, will be left to just study what we do.''
http://www.nytimes.com/2004/10/17/magazine/17BUSH.html

We've sold what integrity was left in the "full faith and credit" of the US Government.. to Bear Stearns/JPM. For who knows what. 30 pieces of silver? Don't ask, don't tell. Maybe not even that much. Could be $29 billion. Could be more. Could be as much as MINUS $300 billion or LESS. Add some more bank/non-bank clients and the bottom is virtually endless. The US government is now backing random mysterious hedge funds and is on the hook as such. The Fed is talking about issuing its own AUTONOMOUS debt. Who will buy it?

It's not important. We're innumerate.
The US is trying fiercely to remain FAR from "the discernable reality".
The economy, the war, our whole political system is "faith-based".
Divorced from the truth and from reality.

I don't know what The Powers That Be are counting on to save us.. the Rapture?

Quote:
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
Ludwig von Mises

or more succinctly, "Depression is the aftermath of credit expansion."

As for supply-side economics: Been there, done that, and it sucked.
see also: (unclear who to attribute this to; paraphrasing) "The definition of insanity is doing the same thing over and over and expecting a different result."

Of THIS I think we can accuse the current admin. in spades.
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Old 04-13-2008, 10:17 PM   #25
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Wow, intense. I wonder, with your view, why would you say housing will only fall 10-20% min? Your senario is "the meltdown". I'd expect housing to fall much more if that happens. Just curious.
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Old 04-13-2008, 11:07 PM   #26
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Rockon.. It's just based on current terms.. and some numbers in my head from various sources among which:
The Big Picture | Joseph Stiglitz On The Economy
I agree with his assessment more than his solutions.

When you think about it... it just HAS to.
Median US household income is about $48k
Median house price is about $230k
That's about 4.8x income, when the historical norm for home affordability has been 2-3x income. You could adjust for larger homes but of course in many areas the factor is much higher even relative to local median wages. Conversely, there may be pockets of relative affordability. I think EVERYwhere may go down; are you not aware that new mortgages want 20% down once again? Stricter lending practices will reduce prices, absolutely. (All the crazy legislators are instead trying to prop home prices up!).

Here it claims the median US house price has appreciated 6%/year over the last 40 years. Not true for median wages, I think you'll agree.
The Real Returns: Median and Average House Prices in USA Since 2000

Anyway... there're a bunch of other links/graphs/etc. I could dredge up.. none of them particularly contrary in establishing more-or-less-get-to-"rational" home prices, all else being equal...

;-) you say "only"... yeah. with a real depression or some wierd hyperinflation, who knows? Ay!!! I have no idea what the nominal value could be.. $500?... $5,000,000?
I have no idea what to do.. since the real upshot of all this would be truly what's considered 'tin-foil hat" terrritory.. where you want gold, guns, ammo and a 10-yr. supply of MREs. A nominal home price figure would be kind of irrelevant. Either live in it or rent it; forget what it cost you, that's water under the bridge.

It is intense. I would never want to be Chicken Little ("the meltdown!" "the meltdown!")
But the more I read about certain facts and aspects, the less I could brush them off or ignore them.

I'm open to anyone who has a convincing opposing argument on any point, believe me!
I just couldn't see anything countermanding many elements of my previous post. I don't see where new US growth is now supposed to come from.
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Old 04-14-2008, 12:18 AM   #27
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Yes we are spoiled, it could be much worse:

Iceland puts the freeze on krona speculators as economy boils over - Times Online

DD
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Old 04-14-2008, 10:32 AM   #28
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To be honest.... I think that a lot of what is going on in the stock market (volotility wise) is being driven by two factors. 1. Acess to market and financial data almost instantly 24/7. 2. The rise of the internet and the ability for almost anyone to buy and sell stocks instantly anywhere in the world.
Obviously I cannot prove any of this, but it seems to make sense to me. Years ago before the rise of the internet, the vast majority of people could only check their stock prices at most, once a day. So small, temporary events on the market, I think would tend to blow over, more often than not. Now add the rise of online trading, and people can react to those temporary market dips almost as fast as they occur. I would think that if enought people start doing this sort of panic selling and buying, that it would have the net effect of causing the entire market to have more volotile swings up and down. Like the ones were have been seeing with more frequency.
I guess the analogy I would use is people that constantly weave in and out of traffic during rush hour, in the irrational expectation that they are actually going to get to their destination any faster. When the reality is that if enough people engage in that activity, it actually winds up slowing everyone down.
Not sure what to do about it... I am certainly not an advocate for any sort of govt regulation on this, just something to be aware of.
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Old 04-14-2008, 10:53 AM   #29
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The other day at the doughnut shop - a few ER's and not so early retiree's sitting around watching out the big window a late Kansas City snow flurry - but the snow was melting not sticking.

After a long discussion - the Kansas City Royals shall rise from Charlie Brown's Pumpkin Patch and make a run for the World Series after decades of somulance.

Some things can be overwatched. Worrier's worry and hope spring's eternal for the optimist.

For me - Bavarian creme filled and black coffee.

heh heh heh - stay balanced. Pssst Wellesley and all that rot. .
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Old 04-15-2008, 03:34 AM   #30
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armor99.. agreed, but in some ways the instant info and access should make markets more "efficient" since people are in a constant process of valuation.

I guess in the traffic example people WOULD get there faster if their lane changes could be instantaneous and their reaction times didn't create a lag.

I think the current market problems are due to insecurity about the accuracy of the information. No One Knows what's on the books. No One Knows what's off the books. How are companies even ALLOWED to have "off balance sheet" items? That is where there have been failures in regulation.

Much is said about open-ended liabilities of SS and Medicare.. little on the open-ended and off-balance-sheet Iraq expenditures. That's just ONE aspect of the dollar's decline, if one thinks of the value of the dollar as being similar to the "stock market" price of shares in USA, Inc.
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Old 04-16-2008, 12:37 AM   #31
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Ladelfina:

Thanks for taking the time to write and post your really long post above. A really excellent, succinct synopsis.
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Old 04-16-2008, 11:55 AM   #32
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Ha ha.. yeah, it's one of my more "succinct" posts!
One overriding aspect I didn't even emphasize is that all this talk by Bush and Paulson about "supporting a strong dollar" is OUT and OUT LIE. It's a way to finance the Iraq war and their other reckless spending on the cheap.

A 40% drop in purchasing power is money stolen directly from your pocket and mine. Doubly from mine because since I buy in euros, everything is an "import"; American residents have a bit of a buffer with local products and services.

The savings of what seem to be lower taxes are FAR outweighed by this.
Would you rather be taxed at a 35% rate .. or be taxed at a 15% rate and have your money buy 40% less, putting you 55% in the hole? The Republicans have faked everyone out with their false framing.
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Old 04-16-2008, 12:26 PM   #33
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Must suck to live over seas with the falling dollar. So how do you manage? Just cut back? Get a job?
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Old 04-16-2008, 03:54 PM   #34
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Cutting back on expectations.. not eating out at all or touring the countryside much. Thinking twice before driving down to Rome (gas now $85-90; tolls now $24; it's 2 hours away). Plans for a kitchen re-do pretty much dead for now (and the kitchen is a bear to work in, on top of being almost 40 years old). Ditto the systemization of the crumbing blue cement "pool"/rainwater catchment (our gutters are supposed to drain into it but we'd have to dig up and replace those pipes since there's no collection happening; old cement/jointed pipes probably invaded by roots). We'd hoped to do one of 3 things: cheapest= underground tank, fill in the "pool" with earth/plantings; medium= re-do the piping along with the minimum to landscape and turn it into a nicer little pond area; $$$$$= excavate (rock) further (3ft. now -> 9ft. min. needed), expand and make it into a real "bio-lago", a natural swimming pool with special plants, depth and circulation pumps to keep the water clean and algae to a minimum.

Those 2 things would have been nice but we can do without them. I don't feel good about commiting the funds with the future so uncertain. House is paid for, so the biggest costs are (roughly in order) heat, food, car insurance/gas, prop. tax, other utilities. If the dollar drops as much again as it has already then we will be in pain mode.

Always have the option of moving back to the US.. it would just take some time and money: starting over w/DH's green card and selling the house. Not at the point yet of offering English lessons but I'm starting to think about it. We could also sell one of the cars for a couple thousand/year in savings in insurance, registration and excise tax. We don't feel poor.. for now!
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Old 04-16-2008, 04:32 PM   #35
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I suspect it will rebound eventually. Good to know you are not in pain mode yet.
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Old 04-16-2008, 05:18 PM   #36
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Quote:
Originally Posted by unclemick View Post

Some things can be overwatched. Worrier's worry and hope spring's eternal for the optimist.

For me - Bavarian creme filled and black coffee.

heh heh heh - stay balanced. Pssst Wellesley and all that rot. .
Ladelfina thought provoking post yup, succinct not so much.

Although I could quibble with a number of your points, I guess I fall into Uncle Micks camp, I am basically an optimist.

So rather than using logic to make you feel less worried how about a Bobby Mcfeerins classic
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Old 04-16-2008, 08:03 PM   #37
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ARRRRRRR
I HATED that song from the first time I heard it!

1988.. I was in more of a Jane's Addiction / Leonard Cohen / Nick Cave / They Might be Giants groove.


Funny.. haven't listened to this album in a few years:

LEONARD COHEN
Everybody Knows
(co-written by Sharon Robinson)

Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That's how it goes
Everybody knows
Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died

Everybody talking to their pockets
Everybody wants a box of chocolates
And a long stem rose
Everybody knows

Everybody knows that you love me baby
Everybody knows that you really do
Everybody knows that you've been faithful
Ah give or take a night or two
Everybody knows you've been discreet
But there were so many people you just had to meet
Without your clothes
And everybody knows

Everybody knows, everybody knows
That's how it goes
Everybody knows

Everybody knows, everybody knows
That's how it goes
Everybody knows

And everybody knows that it's now or never
Everybody knows that it's me or you
And everybody knows that you live forever
Ah when you've done a line or two
Everybody knows the deal is rotten
Old Black Joe's still pickin' cotton
For your ribbons and bows
And everybody knows

And everybody knows that the Plague is coming
Everybody knows that it's moving fast
Everybody knows that the naked man and woman
Are just a shining artifact of the past
Everybody knows the scene is dead
But there's gonna be a meter on your bed
That will disclose
What everybody knows

And everybody knows that you're in trouble
Everybody knows what you've been through
From the bloody cross on top of Calvary
To the beach of Malibu
Everybody knows it's coming apart
Take one last look at this Sacred Heart
Before it blows
And everybody knows

Everybody knows, everybody knows
That's how it goes
Everybody knows

Oh everybody knows, everybody knows
That's how it goes
Everybody knows
-----------


20 years on and more relevant than ever.

(but I appreciate the thought, clif!!!)
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Old 04-16-2008, 08:05 PM   #38
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ARRRRRRR
I HATED that song from the first time I heard it!

1988.. I was in more of a Jane's Addiction / Leonard Cohen / Nick Cave / They Might be Giants groove.
Have you?

Since the dollar has fallen?
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Old 04-16-2008, 08:12 PM   #39
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Quote:
This video is not available in your country.
FASCISTS!!!!

(I have the CDs.. never watched music videos much)
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Old 04-16-2008, 08:16 PM   #40
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LOL cant imagine why they would block it!
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