United States Heading towards a Depression?

You're wrong on that one.

Everytime the US has an extended war, it goes bankrupt.

From the Revolutionary War to today's Afghanistan/Iran war, it always wrecks the country's finances.

It is followed by a period of high inflation, taxes, and economic contraction.

The bubble that occurred in real estate was the result of starved investment opportunities due to the government extracting so much capital out of the economy to throw away on killing people.

Without war or economic shocks (like the oil embargo [70s] or Dust Bowl [30s]), the economy does well.

Bush killed the economy wasting all of its savings and investment on building guns rather than making butter (he can kill foreigners but can't take care of Americans, a la Katrina).

 

No, I'm correct. Sorry.

Not true. WW2 had a significant financial impact on the US, but Vietnam had little if any. Same goes for Iraq.

Really? Can you perhaps provide some evidence of how it "wrecks the country's finances"?

Again, some specific examples and evidence of this would be helpful.

The bubble was caused 100% by irresponsible lending practices ushered in by the CRA. Clinton and Carter, and the CRA are almost entirely to blame for the problem.

Er, actually the economy tends to do better in periods of war. War is money. Military budgets historically offset recessions. Aside from employing people. A war time economy also ushers in advances in technology and new goods and services. Sacrifices, rationing, and rational thinking and spending are other advantages seen in periods of war, again, historically.

The "post war" periods in American history have always shown the economy to be strengthened as a result. The advances in technology are primarily believed to be the reason for that.

You are misinformed. What savings and investment are you referring to? The economy, including job creation and tax revenue grew more under George Bush than at any other time in our nations history.

As for Katrina, the US had been sending billions down to LA for 40 years for levy rebuilding and re-enforcement. Instead people like Ray Nagin and the Governor pissed that money away.

NO needed to, and still needs to learn how to take care of itself. The federal government actually did respond immediately, but was turned away initially.

Keep in mind that the US is not "killing foreigners" we are killing terrorists. There's a reason there were no attacks on the US in 8 years, but you know that.

You're probably one of those people that think that Clinton gave us a surplus of money too...

 

History of Recessions in the 20th Century

You do know there was rationing of just about everything during World War 2. There was a dramatic drop in the standard of living in the United States.

Sugar, meat, iron, nickel, rubber, etc. were all rationed. That doesn't sound like prosperity to me.

In fact, World War 2 just about bankrupted all countries involved. The US was reaching its limits with Japan, which is why they were so desperate for Russian help. The atomic bomb saved the US from real misery, in some sense.

World War 2 is the epitome of how wars destroy countries and their economies.

The Vietnam War wiped out the US currency. After 1965, they removed all precious metal from all coins and the last competition to the Federal Reserve Note ended.

Huge budget deficits started, which led to the US abandoning the gold standard in 1971, essentially defaulting on the dollar.

This set the stage for rampant inflation through the 1970s and high unemployment.

That doesn't sound like prosperity to me.

The Iraq (if you mean Persian Gulf) War was so short it's hard to say it had any real effect on the economy.

However, the Iraq/Afghanistan War on Terror has led to the destruction of the financial industry today (and spreading worldwide).

I just don't know what to say to this. It's such an insignificant piece. Economies don't crash (certainly not nationally, let alone globally) because people buy homes.

A war economy is a dying economy.

Most advances do not come from war. Think of the computer, the car, the telephone, or electricity.

However, war takes peaceful inventions and adapt them for destruction.

War has no useful purpose for a healthy economy.

They grew because of inflation. It was all fantasy money. Just because something is more expensive does not mean it is more valuable.

If you are buying less at the higher prices, you are actually becoming poorer. This is exactly what happened under 8 years of George Bush (not that it really matters to me who was President).

So, the government failed the people. I can certainly agree with that.

Who turned the federal government away? Was it the people of New Orleans who were asking for help? Or, was it another bureaucracy fighting the federal bureaucracy, with the people of New Orleans caught in the middle.

The end result is the government failed US citizens while killing people overseas.

So-called terrorists can be foreigners. Unless, you are saying the US is killing American terrorists?

Who said I liked Clinton? The only good thing Clinton did was not involve the US in any large-scale wars.

That's why the economy could boom through the 90s without that millstone of war spending on the country's back.

 

Honestly, I couldn't be surprised that people would be THINKING of heading into one, but I don't think so.

If you guys realize it, this is all a mental thing. People who think they can observe this economy is absolutely wrong. Right now, everyone is trying to save, which is the problem. This is the PERFECT time to spend! Sales, sales, more sales... What we also got to realize is that the American government MUST produce a surplus in order for us to go somewhere. The past governments have been just borrowing and borrowing money. Canada had this problem too, but in 1993, we got our first surplus in years. The Americans have to realize they must follow suit one day or another.

 

Yes, the USA is going to have a depression, if not in one already.

States are trying to save themselves from the collapse of the dollar...
but the sub prime crisis was just the beginning. This year look for
the "option arm" mortgages to wipe out what little was left of the
US economy.

 

FBI discovered the sub-prime fraud in 2004!

Don't ask; don't tell: ... lol
http://www.huffingtonpost.com/william-k-black/the-two-documents-everyon_b_169813.html

 

Mark Zandi, chief economist of Moody?s Economy.com, told The New York Times that he now placed the odds of "a mild depression" at 25 percent, up from 15 percent three months ago.

In his view, the unemployment rate would reach 10.5 percent by the end of 2011 -- up from 7.6 percent at the end of January -- average home prices would fall 20 percent on top of the 27 percent they have plunged already, and losses in the financial system would more than triple, to 3.7 trillion dollars, the newspaper said.

http://news.yahoo.com/s/afp/20090228/pl_afp/useconomygrowth;_ylt=Auk1i_xIWghNMO.Gk9Oo5k3v5rEF

The Real Estate bubble started in 1997 and got worse after the Clinton dot.com crash. It appears that Greenspan replaced one bubble with another.

WW2 got the US out of the Great Depression.

The US also boomed during WW1.

 

So essentially what we may need is a great war. I guess we can choose - Civil v. World. Hmmm... tough choices these days... personally I prefer a revolution against those who profiteered from it... (sadly, there is sometimes truth in many a joke)

 

I'm not sure why you call it Clinton's dotcom crash. The world was awash in cash but a lot of political instability (Russian collapse, China crisis, Argentina crash, Japan's stagnation, end of Apartheid, Baltic wars).

The world saw the USA as the best place to put investment dollars because it was a sea of calm compared to the rest of the world.

This certainly couldn't be said during Bush's Presidency.

The reason the US did so well after WW 2 was because it was the only country that didn't have it's manufacturing bombed into the ground after years of fighting.

It was in the best position to benefit during rebuilding because it could produce the manufactured goods the world needed.

War destroys wealth, it does not create it.

Still, during World War 2, everyone suffered (including the United States).

From Wikipedia...

The post-World War I recession was an economic recession that hit much of the world after World War I.

The decade before the war had seen some of the fastest economic growth in history. In many nations, especially in North America, this growth continued during the war as nations mobilized their economies to fight the war in Europe. After the war ended, however, the global economy began to decline. 1918-1919 saw a modest economic retreat, but the next year saw a mild recovery. The worst year of the recession was 1921 when the global economy fell very sharply.

=================
"World Wars I and II weakened the old imperial nations, eroding the subtle monopoly of the gold standard. As most of their gold had been traded for war materiel, these countries had to keep printing money to rebuild their shattered cities and industrial plants. To return to money backed by gold would have been to leave their economies at the mercy of U.S. bankers. Thus the subtle monopoly of the gold standard was partially broken in these countries. The arms race that followed WWII almost totally eliminated gold-backed money as nations continued to print money wastefully for war."

=================
I suppose, you could call war good, if you destroy every other nation's ability to produce (while keeping yours) so they become dependent on you.

 

I just read a review in the New York Times Magazine section from August 2008 that was a result of an interview and review of the work of Professor Nouriel Roubini. He is the academic, now widely followed who first started predicting that the US economy was headed for a financial collapse. As a result of his studies he started predicting this in late 2004. He predicted the collapse to occur around 2006.

On September 7, 2006 he spoke before IMF economists predicting the collapse. He was met with skepticism.

Now he is widely followed, has testified before Congress.

The article was written by an academic professor of economic history.

Roubini's analyses and methods of predicting this event are described in detail in the article. His academic background/education/training is impressive as are his associations with other formidable economists.

The essence of his research is described in this paragraph from the article....

Upon reviewing these common attributes of national economic systems that failed he started looking for the next catastrophe as described here....

Roubini himself basically agrees with the article, describing it as a fair description of his analyses, history, perspective etc.

The problem with current-account balances is a result of increasingly large dependance on importing oil, and the price increases that occurred over the past decade, which accelerated at an alarming rate in 2007 and 2008. It is also a function of the loss of manufacturing and enormous purchasing of products from places such as China. While all this has been occurring the US has not extensively grown its own export base...at least in no way that even approximates the growth in imports.

Our own banking system has increasingly suffered from less and less regulation. This took off in the 1990's and accelerated during this decade of the 2000's. Lending standards and risk analysis have collapsed as evidenced by the sub primes and other risky mortgages. Its also a function of many other types of lending. I was astonished to see something that identified auto loans in 2007 being at or slightly above full purchase price of a car. Whereas I was once intimately connected to the commercial real estate markets and saw the collapse of commercial lending standards in the 1980's/1990's I am more removed from it now. I did read recently about an enormous slew of commercial loans that are interest-only reflecting loans made in the early to mid 2000's. That probably suggests problems. If the owners aren't storing money to pay down loans....we will have a slew of problems with commercial real estate loans.

Finally, there are abundant examples of breakdowns in corporate governance. Most corporate boards have been exposed as jokes being simple rubber stamps for executives. Its a door opening for outrageous corporate behavior.

Roubini's latest commentary suggests continued economic problems but some mitigating of this impact as China and India become more fully integrated into the world economy and less protective of their own national systems.

 

We need to hurry up and have the total collapse. The sooner the better.

 

I recently read that a new turning point is to be expected in March...

Keep your eyes and ears open, who knows the next collapse is around the corner!

 

I know, let GM and Ford go bankrupt already - make room for businesses that actually have their act together.

Spending hundreds of billions of dollars to bail them out when it's pretty obvious they're going to collapse the minute they don't get government funding is just wasting money, which is exactly why so many companies are going bust to start with.

"Holy *@&$, we're going bust again because of a financial crisis because all we ever do is borrow money we don't have. Oh I know, let's borrow some more money to get us out of this! Yeah! High 5's all round!"

 

AIG has reported a loss of $62 billion in Q4....yeah....$62 billion.....

Total loss for 2008 = $99.3 billion.....

Guess what...the government will be giving an additional $30 billion to AIG.

Source.

 

Recently I told someone that I am making more money now than ever, and her immediate response was total DISGUST. Like "how DARE you say something like that when I am telling YOU how awful everything is..." She did not want to hear anything positive whatsoever, and I can see this attitude is widespread. But it will pass like all fads.

 

I totally agree. While most of America is in a panic, I personally cannot wait to see these businesses fade away. Let's make way for existing, and hopefully new, businesses that are more organized. I'm also hoping that these new businesses will bring new developments and technology (like energy efficient cars) that our country needs. We really need to stop trying to prop up businesses that would die if we weren't giving them money. If they haven't figured out how to turn the tide yet, they are not going to.

And giving more money to AIG when it's BLEEDING money left and right is just retarded. That's like my dad giving me another credit card because I've maxed out the previous 20. When are we going to learn? It's like we put Paris Hilton in charge of the economy....

 

Under 7000... Another trillion for Hamas and Gaza, God only knows why, and likely more for AIG...

Way too go Obama.

 

Exactly. I think this is more of a "correction" than a "doom and gloom recession". Everything was going great, people were spending a lot of money, and businesses who ran rubbish got by purely because people were throwing money around. People are now tightening up and not buying just anything, and now those businesses have found themselves going bust.

Take a mining company - in a fad, china's demand (basically their only client) goes down, and now they're getting hammered. It's called diversification, that's business 101 stuff. Many of them have all their eggs in the 1 basket, and now they're paying the price.

Now take a company like Woolworths (the major Aussie supermarker) - sure they're basically a bully putting everyone else out of business by opening a ton of new stores in a variety of industries (petrol, alcohol, general walmart type stuff, electronics etc - and looking to expand into new ones!), but their profit is UP and they're hiring thousands of new staff. This company is diversifying, investing in clever marketing, and constantly keep 1 step ahead of the competition.

It's not as if there isn't a truckload of money to be made, you just can't fluke it like a few years ago.

EDIT:

Just found this article: http://www.news.com.au/business/story/0,27753,25131497-31037,00.html

Funny, GM + Ford are saying they need bailing out because NO-ONE can make money right now, yet VW is up 15% (I didn't know they even made a profit lol)