HFWR
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Boring, orderly markets that make investors sleep well at night don't get ratings.
Bingo!
Or is that DING-DING-DING? I can steal from CFB, now that he's gone...
Boring, orderly markets that make investors sleep well at night don't get ratings.
IMO, the heady days of the post-WW2 boom are over, and have mostly been since the '70s. We have to readjust to a new norm, one that doesn't rely on excess leverage. Grandma was right. How can we best make that economic transition (that has been needed for decades) and set a new baseline that doesn't occur so quickly and violently that it wrecks the economy?
Okay, okay, y'all -- speaking to no one in particular, I fear we may be headed toward Bush versus Obama "celebrity death matches" or drawn out partisan debates long on partisanism and ideology and short on substance of the relevant issues. This has been a good thread so far, and we've mostly stuck to the issues that are critical to money, investing, economics and the politics of FIRE. I'd like to present some thoughts for consideration.
Let me start with a hypothesis (which you're free to rebut): What we're seeing now is the final chapter, the denouement if you will, of a society which has tried to pretend that the post-WW2 economic bubble which has been deflating since the 1970s was actually sustainable. And to try to sustain it, we've been throwing more and more debt at it -- personal debt, corporate debt and government debt -- so the people currently expecting certain levels of largesse got it. Over time it took more and more debt and leverage to keep the prosperity train rolling along.
And then we hit the wall. It's ending with a sickening thud. I guess the only bright spot is that if we stayed in denial a few years longer, the sickening thud would have been worse.
Given that (or a rebuttal if you disagree), what now? Looking at the issues and the prudence of public policy that affects the economic future of every single one of us, how do we climb out of this mess? Yes, government has to play a role in something this massive, I think, but what role? The transition to a nation of better savers is a good thing, but the sudden and dramatic shift to it -- the almost unprecedented slowing of the velocity of money -- is brutally pummeling the industries and businesses that keep people employed. Many people (myself included) who currently have pretty good times going are pulling WAY back just in case they wind up with a pink slip; we want as much cash in the bank as we can muster "just in case." Multiply me by millions of folks who have good circumstances *now* but fear their own personal economic crash in the future, and you have a massive slowing in the velocity of money, combined with the Tragedy of the Commons: What good does it do me to live my life as I normally would unless I feel others in my position would do the same and make enough of a difference to boost the economy?
IMO, the heady days of the post-WW2 boom are over, and have mostly been since the '70s. We have to readjust to a new norm, one that doesn't rely on excess leverage. Grandma was right. How can we best make that economic transition (that has been needed for decades) and set a new baseline that doesn't occur so quickly and violently that it wrecks the economy?
Please feel free to disagree strongly and spiritedly with each other. But hopefully we can do it with civility and without straying from the core issues that affect those of us who are FIREd and those of us in the Quest for FIRE.
Thanks!
Let me start with a hypothesis (which you're free to rebut):
I agree with you completely, Ziggy. And that is exactly the problem that our president is trying to address.
Sorry, I just can't be that cavalier with so much at stake. The plan needs to be something that stands up to critique as having a reasonable chance of success. I don't think a spending and tax the top 2% plan does it. Neither does the market. So no, I don't think we should just "give it a chance" until it meets some acceptance.Whether you agree with his approach or not, I do think we should give it a chance. He inherited this mess, after all.
IMO, the heady days of the post-WW2 boom are over, been and have mostly since the '70s.
I agree with you completely, Ziggy. And that is exactly the problem that our president is trying to address. Whether you agree with his approach or not, I do think we should give it a chance. He inherited this mess, after all.
You are correct that Obama inherited the financial mess we are currently in. But he ran on a platform that said he was the one to correct it. He marketed himself to the American people as the person that could fix our problems. That's why he was elected. Now he has to produce and not keep saying it was not his fault. You wanted it buddy , now you got it.
Maybe. But perhaps "this time it's different" because in those prior national emergencies we didn't have CNBC, 24-hour cable news or the blogosphere to remind everyone 24/7/365 about how we're all doomed.
Do people really think this is worse than 1979-82? Gas lines and crazy inflation and deep recession etc.? I keep hearing from the news whores, "WORST DOWNTURN IN OVER A QUARTER CENTURY!" where they could say, "not as bad as '81. I've been hearing the "country in decline" talk, comparing us to the Roman Empire (which is totally invalid since if you combine the republic years and take the traditional end of ~450 AD it was around 3 times longer than us) and it just doesn't seem legit to me. It's like my coworkers who are convinced it's the end times next month, the rapture if you will. I think it must be tempting in some way (vanity) to imagine oneself living in interesting times, to be a witness to something, even a global car wreck. What is an ending even mean, anyway? Japan had two cities nuked, it's cities ravaged, millions of servicemen killed and ultimately occupied by a foriegn army at the end of WWII. 35 years later they were the scary economic powerhouse of the globe. What is decline mean? The British Empire has certainly declined over the last 100-200 years, but it's still a lot nicer living in England than most other places in the world. If it means I have to put away my big foam "#1" hand for a while, I think I can live with that.
True, but my point wasn't that these types of inputs didn't exist before -- it was that now we're saturated with it and it spreads instantly.No, we just had crappy journalists who never went to journalism school and therefore had no ethics and would print anything that suited their purpose. Instead of blogs, we had pamphlets in which no holds were barred. At least now, crap get called on as soon as they are printed. In the old days, you'd need to be able to 1) read, 2) write, and 3) have enough money to fund a printing run.
The stock market has already taken care of that for me.I don't have a big foam #1 hand & could give a hoot whether you or the USofA has one or not - but, if Pres. Obama's agenda of "sharing the wealth" results in my having to put away my big foam Early Retirement hand for a while - that's getting a little too personal!
RAE, maybe I'm missing something in the address that you see. Where is the President addressing the issues of the nation getting too far out on credit? I see that he wants to get credit flowing (probably needed in the short term), but....then what?
Sorry, I just can't be that cavalier with so much at stake. The plan needs to be something that stands up to critique as having a reasonable chance of success. I don't think a spending and tax the top 2% plan does it. Neither does the market. So no, I don't think we should just "give it a chance" until it meets some acceptance.
No question that he inherited the mess, that's obvious. But we are looking forward, so whether he inherited it, or somehow he was magically 100% responsible for it, the action moving forward would be the same. This is Friday, Feb 27th, 2009. I'm looking forward, not backward (other than to learn from history).
-ERD50
...... I'm sorry, but cutting taxes is not going to do it....that's been tried and it didn't work. ......
I'm with Andy, could you elaborate on when it failed?You may feel that there is too much pork in the stimulus bill, but without some kind of govt. spending right now, how is this economy going to turn around? I'm sorry, but cutting taxes is not going to do it....
I am hopeful that the good news is that we are experiencing a buyers' remorse backlash of monsterous proportions. Even the wall street managers and bankers that voted for the BHO experiment are distraught about what is occurring. The suburbanites with the Obama/Biden bumper stickers on their $75K cars are now in shell-shock over the loss of their beloved morgage interest deduction ("I really thought he would govern from the center" is the current refrain).
The outcome will be a bloodbath for the Dems in the midterm elections, particularly in the blue-red suburbs. This country is, and will always be, a center-right nation.
You guys keep saying how shocked all the Obama voters are about what he has proposed to do since taking office. On the contrary, I know a lot of folks who voted for the guy, and I've yet to talk to any one of them who is shocked. He's actually doing just about what he said he would do, which is quite refreshing (for a politician).
As for the mortgage interest deduction, my personal opinion is that it is one of the things that got us into the mess we're in, by encouraging some people to buy more house than they could afford. Others have stated in this thread that people getting too far out on credit is a major cause of this mess we are now in, and I agree. I know I won't be shedding any tears if the mortgage interest deduction away.
I know I won't be shedding any tears if the mortgage interest deduction away.
Helping the less fortunate is a noble thing. And even aside from my belief that this should be accomplished through private charity to the extent reasonably possible, I'd also say that it's not the poor who generally start businesses and hire people.Great idea. But let's take away yours as well as those of people who make more money than you.
Lots of unattractive sentiment here about how "I don't care what they do to those rich people (since I am not now and never will be rich)."
Great idea. But let's take away yours as well as those of people who make more money than you.
Lots of unattractive sentiment here about how "I don't care what they do to those rich people (since I am not now and never will be rich)."
Ha
If you re-read my post, you'll see that my concern was that the mortgage interest deduction is one contributing factor in leading to the mess we are in (as a country), by encouraging too much credit when deciding how much house one can afford. Not the major factor, I realize, but a contributing factor. Nothing about my personal situation, and how that may or may not be affected (although I would be glad to give up the deduction, if I had a mortgage, to respond to your suggestion). You may disagree with the opinion I stated, but please don't change the meaning of what I said, or put words in my mouth. By the way, I have absolutely nothing against people that have worked hard and taken risks to get where they are economically. The country needs people like that, of course. I think there is room here, though, to disagree about the policies that should be implemented from this point forward, to help get us out of this mess. Encouraging people to live within their means, and get off of credit, is definitely one thing that is needed in the long run.
Well you are preaching a good sermon here, but let me ask directly. Would you personally pay more taxes as result of the proposed plan to phase out mortgage interest deductions?
Ha