United States Heading towards a Depression?

I hope you're right.

 

Will do, and thanks.

 

Bernanke believes that the current economic credit problems are being caused by assest depreciation similiar to what happened during the great depression. But Bernanke is convieniently leaving out the fact the the US was on the gold standard at the time of the 'Great Depression'.

Bernanke believes that he is adding liquidity when in fact he is devauling the dollar in an effort to support a housing price bubble that was created by lax lending standards.

During the Great Depression farm and commodity prices decreased 25%. Other than housing prices , where is the asset devaluation today that Bernanke is talking about?

The US is returning to a 1970s style stagflation that at best will lead to a servere recession.

 

Uh-oh, I wish I could figure out who is right. I lived through that hopelessness of the Seventies though. I never hoped to again, but here we are. $4.15 per gallon yesterday. $68.00 to fill my tank. Everyone out of work. Two homes on my cul-de-sac in bank foreclosure. We need a change. Fast.

 

That's a solid assessment Bogart.

Murray Rothbard's "America's Great Depression" is a fantastic read.

Here is the PDF of the book

http://mises.org/rothbard/agd.pdf

It really helps understand the Great Depression and how it went through different phases.

 

The Great Depression actually took a few years to wind out. The market did not bottom out until March 1933 after the stock market crash on October 29, 1929. Strangely, the stock market and economy recovered in early 1930 only to tank afterwards.

LEH is expected to release earnings this week and it's getting harder for them to deny the true state of their loan portfolio.

http://www.clusterstock.com/2008/5/lehman_leh_to_save_itself_by_raising_5_6_billion_it_doesn_t_need

Even Ed McMahon is in trouble. McMahon defaulted on $4.8 million in mortgage loans with a unit of Countrywide Financial Corp., which filed a notice of default in March.

 

So to is Holyfield, but do you honestly feel sorry for either of these guys? Both had hundreds of millions of dollars.. That damn Bush... He is bankrupting millionaires now.

 

President Bush betrays fears over economy with strong dollar call
http://business.timesonline.co.uk/tol/business/markets/united_states/article4100259.ece

Excerpt

Really good article.

 

Maybe he should have the central bank do what Chavez did and just suspend foreign exchange trading all together?

What's interesting about this situation is that myself and other businesses that deal in global trade were struggling in the 90's and until about 6 years ago, well, actually, in the last 2-3 years were rather stagnant.

Who was crying for us? The economy is always going to be bad from someone's perspective. Getting a good balance all around is difficult, but what is really needed.

How one achieves that outside of either suspending foreign exchange trading, or just making up some monopoly money like they did in Europe is anyone's guess.

 

Controls like that just create gray and black markets. It's counter-productive from the view-point of the state.

A weak dollar is a reflection of the hyper-inflation that is not all that far away. Yes, it helps exporters, but you won't be able to do enough trade to compensate for the affects of domestic price inflation.

An ideal scenario is a stable currency. We haven't had one since the FED. It has been nearly non-stop inflation, which promotes government and private debt. Sadly, it's unsustainable long term, and the day of reckoning is coming. Next week, next year, 10 years from now, the bill will come due.

Technically, we are the ones creating monopoly money for the last 2 decades.

This is a great article related to your points about import/export pricing and how one man's crisis is another man's Christmas. You might like the Christian perspective in it.

 

Bernanke and Paulson are trying to 'talk the dollar up' with threats of intervention. At the same time, the US has negative real interest rates and high inflation. Talk is cheap. I wonder how Bernanke and Paulson plan to intervene?

Btw, the European Cental Bank is planning to raise rates in July to combat inflation. Lets see what happens if LEH collapses. Today LEH announced nearly 3 billion dollars in losses and plans to raise 6 billion in capital. Does Bernanke lower rates again in the face of higher ECB rates?

The trade deficit is at an unsustainable level and the dollar is taking a beating due to this it. Americans need to spend less and export more.

 

I agree.. I was being facetious.

Perhaps, but lets no discount other factors at work here. Confidence in the American dollar with the result of an outgoing president. The fact that a new currency was "made up" out of thin air for all intense purposes, and had an arbitrary unbacked value place on it. Continual manipulation of supply of crude which further exaserbates speculators.

Where there is oil, there will always be inflation. Both in oil rich and oil dependent countries.

It can be achieved, but two things need to occur.

1. Republican tax policy needs to be enacted permanently.
2. The old conservative method of curbing spending at the same time needs to be observed as well.

The government needs to do a GM on several plants it as, and start laying off/closing some plants. The days of the big SUVs are over, so too are the tax and spend politicians on both sides of the isle.

We've had a great deal of help.

I've got to head out and tend to my cat, I'll try to read that later.

 

There's a lot SUV liberals that think things can go on the way they are. People need to be more spartan and get focused.

 

The hell of it is.. the irony anyway, I'd be willing to bet more then 75% of those driving SUV's were liberal soccer moms.

 

It's not only the individual legislators. It's a multi-generational political understanding that they no longer have to be accountable by spending only what taxes produce. They can simply deficit spend, pass the debt forward, and debase the currency to finance it.

If legislators had only taxes to spend, their hands would be tied from wasting money, as they could only raise taxes so high without losing office. And they would have to deliver properly on what taxes they did receive.

Until you address and correct this massive loophole in the system, blaming Bush, liberals or politicians in general is pointless.

We have to understand what money is, how wealth (which is different) is created, and how counterfeiting undermines the relationship between wealth and money.

 

In Saudi Arabia petrol is $0.12 a litre, here it is $3 a litre.

 

There is a reason for that.

 

Saudi Arabia can afford it now but they are on borrowed time. They are running out of water and by 2016 will rely on food imports at the same time their population is soaring.

 

Actually they have plenty of water so long as they have oil money. They have desalination plants. I'm still of the opinion that there is only a few years left in their neck of the woods.

Its pretty evident by all the westward expansion and westward tourism promotion, things like indoor sking hills, etc., in UAE and other places has a lot to do with the fact that they realize they are going to run out soon, and are spending what money they have now on other revenue generating ideas.