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Re: Fear During a Recession
Old 01-03-2007, 12:43 PM   #21
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Re: Fear During a Recession

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Re: Fear During a Recession
Old 01-03-2007, 12:53 PM   #22
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Re: Fear During a Recession

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Originally Posted by brewer12345
Could there be an unpleasant downturn? Sure. Happened within (relatively) recent memory. Were the effects lasting? Doesn't look like it. How likely is it that there will be a recession soon in the US? Actually, I'd say chances are at least even odds that we get one in the next two years. But for those of us with a diversified portfolio, it really isn't that big a deal.
Good, now we are getting somewhere. So, we agree that a downturn could happen, right? And we had a few of those in the past, right? Cool. Now, what is different this time? Well, I would say that the level of family debt is the highest in history (does anyone dispute that?) and consumer spending over the years has increased its importanced in the US economy. Also, the government deficit and debt is the highest in history (does anyone disputes that?), which I reckon would make the goverment's hability to spend its way out of a recession more difficult.
I do not claim to know what would happen (although the scenario is very similar to my home country 25 years ago), but I think we have a situation here that most Americans never faced before, so the results from a major downturn could be quite different from what most are accostumed to.
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Re: Fear During a Recession
Old 01-03-2007, 12:58 PM   #23
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Re: Fear During a Recession

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Originally Posted by camberiu
<snip>
I do not claim to know what would happen (although the scenario is very similar to my home country 25 years ago), but I think we have a situation here that most Americans never faced before, so the results from a major downturn could be quite different from what most are accostumed to.
Would you mind sharing what that home country is?
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Re: Fear During a Recession
Old 01-03-2007, 01:00 PM   #24
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Re: Fear During a Recession

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Originally Posted by Alex
sounds great, let's everyone work until we drop dead!!! yeehaw!!!
Hey hey hey, don't make fun of the people who are going to single-handedly haul Social Security & Medicare out of debt for the rest of us!
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Re: Fear During a Recession
Old 01-03-2007, 01:02 PM   #25
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Re: Fear During a Recession

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Originally Posted by peggy
Would you mind sharing what that home country is?
Uranus.
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Re: Fear During a Recession
Old 01-03-2007, 01:07 PM   #26
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Re: Fear During a Recession

Quote:
Originally Posted by camberiu
G. Also, the government deficit and debt is the highest in history (does anyone disputes that?), which I reckon would make the goverment's hability to spend its way out of a recession more difficult.
I'll dispute it - the national debt in relation to GDP is about 65%, hardly at crisis level - so you are dead wrong there. http://zfacts.com/metaPage/lib/National-Debt-GDP-L.gif
BTW, the national debt was 117.5, 121.7 and 110.3 percent of GDP in 1945, 1946 and 1947.

That was easy. what else ya got??
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Re: Fear During a Recession
Old 01-03-2007, 01:10 PM   #27
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Re: Fear During a Recession

Quote:
Originally Posted by peggy
Would you mind sharing what that home country is?

Brazil.
The country experienced a huge economic boom from the outbreak of WWII until the late 70s and early 80s. In the begining, the boom was due to productivity gains, invesment, industrialization and so on. During the 60s, it changed. It became mostly anchored on goverment debt and crazy consumer spending. Then, in the late 70s early 80s, the economy was hit with a huge downturn and it has never fully recovered. Did people run to underground shelters, buy guns and so on? No, but the impact was pretty significat and the country has been on the slow to no growth track ever since.
Will this happen here? I am certainly not smart enough to claim for certain either way. But I do see some familiar trends (there are many differences too), so I am not convinced that the US is immune to a major and significant economic downturn that would negatively affect even the best planned portfolios.
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Re: Fear During a Recession
Old 01-03-2007, 01:17 PM   #28
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Re: Fear During a Recession

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Originally Posted by Alex
I'll dispute it - the national debt in relation to GDP is about 65%, hardly at crisis level - so you are dead wrong there. http://zfacts.com/metaPage/lib/National-Debt-GDP-L.gif
BTW, the national debt was 117.5, 121.7 and 110.3 percent of GDP in 1945, 1946 and 1947.

That was easy. what else ya got??
That was due to the war (a GLOBAL WAR, the largest in human history). During the years after, the government worked hard to pay it off. It was at 32% of the GDP in 1982 (when we had a really bad recession). We are now at 65% of the GDP and without a major war (unless if you count the ridiculous "war on terror").
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Re: Fear During a Recession
Old 01-03-2007, 01:18 PM   #29
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Re: Fear During a Recession

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For a free subscription to Gary North's newsletter on gold, click here.
He writes a newsletter on gold? I'm SHOCKED!!!!!
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Re: Fear During a Recession
Old 01-03-2007, 01:19 PM   #30
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Re: Fear During a Recession

Quote:
Originally Posted by camberiu

Brazil.
The country experienced a huge economic boom from the outbreak of WWII until the late 70s and early 80s. In the begining, the boom was due to productivity gains, invesment, industrialization and so on. During the 60s, it changed. It became mostly anchored on goverment debt and crazy consumer spending. Then, in the late 70s early 80s, the economy was hit with a huge downturn and it has never fully recovered. Did people run to underground shelters, buy guns and so on? No, but the impact was pretty significat and the country has been on the slow to no growth track ever since.
Will this happen here? I am certainly not smart enough to claim for certain either way. But I do see some familiar trends (there are many differences too), so I am not convinced that the US is immune to a major and significant economic downturn that would negatively affect even the best planned portfolios.
I see. You are comparing a developing country as it existed 30 years ago with the world's largest economy today. And you expect us not to laugh?

How about that wimmins undergarments worn on the head thing? You and Gary into that, too?
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Re: Fear During a Recession
Old 01-03-2007, 01:53 PM   #31
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Re: Fear During a Recession

Quote:
Originally Posted by camberiu
That was due to the war (a GLOBAL WAR, the largest in human history). During the years after, the government worked hard to pay it off. It was at 32% of the GDP in 1982 (when we had a really bad recession). We are now at 65% of the GDP and without a major war (unless if you count the ridiculous "war on terror").
That's funny, it was darn near 65% for the entire 8 years of Clinton and a good chunk of Reagan Bush before him. Truman through Ike had it around 95% dropping to around 50% during Kennedy LBJ. But, if you are worried, then you'd better stock up on bullets, food and water....The End is Near!!! BTW, are you a Pat Robertson fan too? he has some exciting predictions for this year. US should expect Mass killings in '07!!! this comes straight from GOD!! http://www.breitbart.com/news/2007/01/02/D8MDEM380.html
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Re: Fear During a Recession
Old 01-03-2007, 01:54 PM   #32
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Re: Fear During a Recession

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Originally Posted by Nords
Hey hey hey, don't make fun of the people who are going to single-handedly haul Social Security & Medicare out of debt for the rest of us!
you are right, someone does have to do the work! Here's an elegant solution: Have more babies!!!!
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Re: Fear During a Recession
Old 01-03-2007, 02:00 PM   #33
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Re: Fear During a Recession

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Originally Posted by Alex
you are right, someone does have to do the work! Here's an elegant solution: Have more babies!!!!
You first.
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Re: Fear During a Recession
Old 01-03-2007, 02:02 PM   #34
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Re: Fear During a Recession

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You first.
No thanks!! I am permanently in 'practice mode'. I have a bumper sticker that says "baby NOT onboard".
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Re: Fear During a Recession
Old 01-03-2007, 03:01 PM   #35
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Re: Fear During a Recession

Quote:
Originally Posted by camberiu

Brazil.
The country experienced a huge economic boom from the outbreak of WWII until the late 70s and early 80s. In the begining, the boom was due to productivity gains, invesment, industrialization and so on. During the 60s, it changed. It became mostly anchored on goverment debt and crazy consumer spending. Then, in the late 70s early 80s, the economy was hit with a huge downturn and it has never fully recovered.
I remember the stories of the Brazil Hyperinflation. Sounded like the Wiemar Republic - scary as hell. If you lived through that no wonder you worry. Hopefully the Fed will keep us from that kind of insanity and a standard issue recession -- even an extended one - won't be the end of the world to most of us.
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Re: Fear During a Recession
Old 01-03-2007, 07:33 PM   #36
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Re: Fear During a Recession

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Originally Posted by camberiu
Now, I am not asking for much *I think*, just a brief explanation on why things that happened elsewhere with some really bad results cannot happen here.
But I see NO EVIDENCE that the US economy and society are so dramatically and fundamentaly different from the rest of the world that severe economic downturns (again, without Mad Max) could not happen here.
Well, you're asking for a simple explanation of a complex multi-variable problem. Insisting that there has to be a simple explanation won't produce one any faster.

One of the more readable books on the subject is Jeffrey Sachs' "The End of Poverty". Ironically, at roughly the same time Brazil was having its problems, Sachs was called into Bolivia to help with their hyperinflation. Once he persuaded the government to implement the economic solution, hyperinflation ceased in about a week. If you're so insistent upon being educated why the U.S. economy is different from Brazil (or Bolivia) then the book is worth your time. But there aren't any easy answers.

As for the "Mad Max" comments, it's just discussion board shorthand. It isn't intended to be taken personally by you or by any of the other posters.

We moderators (and the posters who've been sending us feedback) would appreciate it if you & Brewer would cool it. Whatever useful information was being communicated in this thread is being lost amid the mudslinging...
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Re: Fear During a Recession
Old 01-04-2007, 12:14 AM   #37
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Re: Fear During a Recession

I think Alex and others have provided a lot of data which says things aren't as bad as they are claimed to be. Just a couple more points:

1. Business cycles exist - so a bull market which the last couple of years have been will be followed at some point by a bear market. Everyone agrees on this and have diversified their portfolio's for that.
2. Market timing does not work. Bull or bear mkt does not matter - we have an asset allocation and we will rebalance and stick to it.
3. Predictions are useful unless they come with details. I can in fact predict a lot of things which have never happened in the US before. example: there will be a woman US president in the future. A person of African American descent will become the US president. Unless I add a time frame to these predictions they are as useless as me saying everyone born will die. Yeah its going to happen, but can you do something with the prediction I gave you just now?
A useful prediction will be Q3'07 will be the start of the next US recession - now if this comes with a money back guarentee then you can tempt one of us to move from out all equity Portfolio to a Short term bond portfolio. Also an end date will be needed too. I will market time if you promise me money back (if I loose any oppurtunity cost money) for following your prediction. No one does it - if anyone can predict to such certainity they will be obscenely rich and would not care about what anyone else is doing.
4. Absolute numbers prove nothin when it comes to govt spending etc. Also you cannot give single examples - one swallow does not make a summer.
I can give you a lot of stats and % which say what were in is a common event.
a) Govt spending and % of GDP - look at the chart
http://zfacts.com/p/318.html
b) Total Public Debt
https://www.cia.gov/cia/publications.../2186rank.html
There are 36 countries before the US - some of them developed, some not. This country is no different expect that it is the biggest in economic strength.

I agree everything is not rosy in the economic outlook but then if you are a long term investor none of that matters - DCA into your accounts and stick to your asset allocation. The rest of it is all spam.

Hope this helps
-h
p.s: If you are not convinced, go ahead time the market - We have a prediction on how that is going to end. You might get lucky once but over your investment lifetime you will end up with less $ than if you just stick to your asset allocation, unless the investment lifetime is less than 10yrs. Then I have no prediction to make though I do have a bridge on sale :-)
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Re: Fear During a Recession
Old 01-04-2007, 06:18 AM   #38
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Re: Fear During a Recession

I do not believe in Gloom and Doom, nor do I believe the future is certain to positive economically. I do believe that the OP has a point to consider, that is, that the economic course we are on will lead to a negative impact in the future.

We've been here before. In the 70's we had severe economic dislocation cause, in part, by the fact that we fought a war without paying for it a the time. Bills do come due. Where is my "WIN" button now. We are fighting a war now, will have to pay for it at some point in the future. There are many ways to do that, raise the tax rate, raise tax footprint, if not the rate, inflate our way out of it, sell assets, cut our future expenditures, many other ways, but we would be an ostrich with its head stuck in the sand if we didn't realize that the piper must be paid at some time.

From what I can gather by the comments that have been made on this board, many here recognize that there is risk and have adjusted to deal with it, not in a "the sky is falling" way, but more in an "Intelligent Investor" way. For example, if I recall correctly Wab and T-A have spoken about diversifying their assets. By diversifying accross asset and geographical class, there is an element of addressing risk. Most here have arranged their portofolios to account for future inflation. Nords has spoken about his plan to pay tax now to avoid assumed higher taxes in the future (isn't that what the conversion to Roth IRA is all about?).

So while I'm not willing to say the sky is falling, I'm also not willing to disregard the possiblity that we are in a period when economic disruption could occur, and do think that we have to keep this in mind.
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Re: Fear During a Recession
Old 01-04-2007, 07:00 AM   #39
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Re: Fear During a Recession

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We moderators (and the posters who've been sending us feedback) would appreciate it if you & Brewer would cool it. Whatever useful information was being communicated in this thread is being lost amid the mudslinging...
Aw, you never let me have any fun...
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Re: Fear During a Recession
Old 01-04-2007, 09:18 AM   #40
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Re: Fear During a Recession

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Aw, you never let me have any fun...
Considering the "quality" of the discourse, I think the moderation has been pretty slack!

I think some of our more active grenade-throwing libertarian posters would benefit from a month or two of moderator duty. It teaches one to not take everything personally, to not respond so quickly or harshly to perceived personal attacks, and to consider... even if just for a few minutes... that the other poster might actually have a point.
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