United States Heading towards a Depression?

Oil prices jumped to a new record above $106 Friday in choppy trading after the dollar fell to a new low against the euro.

http://news.yahoo.com/s/ap/20080307/ap_on_bi_ge/oil_prices;_ylt=Aqx94V3q3vzXKuUrCZoTou2s0NUE

The labor market is worsening. Employers slashed 63,000 jobs in February, the most in five years and a sign that the country is heading toward a recession or is in one already.

The Federal Reserve announced Friday that it will increase the amount of loans it plans to make available to banks this month to $100 billion.

It has already provided a total of $160 billion in short-term loans to cash-strapped banks since the auctions began in December.

http://news.yahoo.com/s/ap/20080307/ap_on_bi_go_ec_fi/economy;_ylt=AryZSq0dMrNgzFclWxTzGVGs0NUE

 

Private job losses totaled 101,000... the offset comes from some 30,000 new government jobs. If that isn't bad news for the long term, I don't know what is!

What might be even scarier IMO is the 450,000 people leaving the job market either due to retirement or just losing hope and giving up (turning 2 income households into 1 income). Whatever the reason, its not going to be good for total output.

 

so what happens when government keeps expanding and there are no longer adequate means to fund it?

up the income tax more? create more juicy incentives for business owners with higher corporate taxes?

 

The government will eventually reach a point when it can no longer expand, but contract. Raising income taxes will just cause civil unrest, since I for one won't tolerate paying higher taxes because my government is imperialistic and fiscally irresponsible.

I also just read on Yahoo news that Car repossessions in the U.S. are at a ten year high, so it looks like the economy is finally coming apart at the seams. Americans are starting to realize that they aren't actually rich, but merely borrowers who are slaves for the banks, and the truly wealthy people who control them:http://usnews.rankingsandreviews.com/cars-trucks/daily-news/080307-120206/

Recessions and depressions are a consequence of a society in which the government practices a poor monetary policy, and where its citizens are mired in debt, with no savings.

 

America is stuffed - importing more than it exports forever and a day, sucking in the world's resources with worthless currency - the time to pay the piper has come.

 

Bernanke is not in the driver seat. Loaning more money to people that can't pay to going to lead to the "worse recession since the great depression". You think it's bad now. Due to a 7.1% inflation rate and a declining dollar the Chinese will require another currency revaluation. The Yuan/Yen peg is the only thing that is preventing a dollar collapse.

 

Canada is one of the largest trading partners with the US and the situation is getting tough. The Canadian dollar is at $1.02 and strengthening. The Canadian Central Bank has lowered rates to 3.5%. Howver, Canada is heating up. Inflation is over 4% and Canada added 43,000 jobs in February.

 

All the FED cares about is supporting the 'housing bubble' but all they are doing is driving up the 'cost of living' so that people can't afford to pay their bills.

What is the FED going to do about this? Throw more good money after bad or make more loans to people that can't afford to pay what they already owe.

- Wall Street banks are facing a "systemic margin call" that may deplete banks of $325 billion of capital due to deteriorating subprime U.S. mortgages, JPMorgan Chase & Co (JPM.N), said in a report late on Friday.

"The weak February employment report points to an economy in recession," JPMorgan said.

The JPMorgan report included a revised bleaker forecast for subprime-related home prices. The bank now sees prices falling 30 percent, from its prior 25 percent forecast. Those prices have declined 14 percent since mid-2006, JPMorgan said.

http://news.yahoo.com/s/nm/20080308/bs_nm/wallstreet_losses_jpm_dc;_ylt=ArbZ.XWUYkye9683L2mdmTKs0NUE

 

Why not just declare the whole country bankrupt and start again?

 

That's a reasonable idea . . .

 

It wouldn't work. People need to change what they are doing now and they will never put up with it.

 

But does the Fed have a choice at this point? With home values evaporating and record volume of loans going into default, the effect is a major contraction of the money supply. When the financial institutions miss margin calls, more loans disappear, more money disappears, and even less money is available for future investment / wealth building. Basically, that's how the great depression started - too much money disappeared.

Of course, people need to change spending and saving habits, because despite a contraction in the dollar supply, the dollar is losing value anyway. Its not just quantity driving down dollar prices, its straight up demand. And there is no demand for a currency backed by a government and private population who lives off consumption debt.

But yea, like I said, what can the Fed do to change personal and public spending habits? All they can do at this point is keep pumping out the cash to try to prevent a lockup in the credit markets.

 

Obama or Hilary wins, I can't imagine the market at that time
But if Mccain won it would take us out of the recession and avoid any type of depression for the united states!

Referring to the stock market

 

The US is in no danger of deflation with a 400 billion trade deficit and 750 billion trade imbalance. The OPEC states, China, Japan and Europe hold trillions in dollars and commodity prices like wheat and oil are going through the roof.

That's a good summation of the situation that we are in. The Fed is risking a dollar collapse and double digit inflation to bailout home loans to people that paid to much for something that they can not afford.

 

I guess its a bit too late now to get Ron Paul elected isnt it.

 

This is an unbelieveable news i cannot beleive on it
i am not in U.S.A but i really take interest on these types of Alert News