United States Heading towards a Depression?

Can you believe it?!!?!!?!?

We actually AGREE on something.

 

Kind of harsh isnt it? The euro is the strongest currency atm...so go with the flow

 

The US is going into a Depression and the rest of the world gets off Scott Free. Keep dreaming.

 

U.S is becoming a second class economic power, get use to it.

 

Actually it is quite the opposite. Dollar is at its highest in 22 months against its European counterparts, oil is getting lower and lower every day. The correction in the housing market has nearly bottomed out. Markets up, and more confident, we still have positive growth, and positive GDP.

Looks like doom and gloom is not quite where you would like it. There's still time. Obama could win.

 

Wow! You really refuse to look at all the data.

But, I'm not here to convince anyone. I am just trying to determine when things have really hit bottom.

As long as people like you keep saying things are fine, it tells me we are nowhere near a bottom yet.

 

Incorrect. Our 13 trillion dollar economy is still the largest single country economy in the world. By far. Don't let facts get in the way of your hatred.

 

Exactly. California alone is one of the worlds biggest economies.

 

China has reached 25% of our GDP with four times the population and people are ready to anoint them the next superpower. People must be on crazy pills around here.

 

Yeah! General Motors used to be the largest industrial corporation in the world as recently as the 90s.

I guess when you are top you always stay on top.

 

What does that have to do with anything? Right now the U.S. economy is the biggest in the world. Saying it isn't, or that the US has somehow become a second rate economy is complete bullshit.

Growth is slow right now, but it would be due to the size of the economy. There's a global slowdown right now, in case you hadn't noticed, as well.

 

Maybe if they wish it hard enough and tap their feet together it might make it so.
I can picture them on their iphones now searching on google trying to decide which part of the US to buy real estate in after we spiral into a depression. (see if you can spot the irony, you smart Europeans, you)


GM has had tough times in the past. Alot of their losses lately have been going towards funding a shift in how they do things. Example: The Chevy Volt.

 

Er, actually, I am looking at all the data. And, I've been living it for quite some time. Every economic indicator points up, not down. Oil will likely be below $90 a barrel by January. Housing boom will start over again next April/May. The world is not coming to an end despite what the naysayers want the herd to believe.

5th largest economy in the WORLD to be exact.

 

I think the housing market is a huge unknown.

People are still losing houses to foreclosures.

Lots of home owners are tapped out on borrowing through 2nds that leave them financially under water (home value is less than total debt).

People are still losing jobs.

Fanny Mae and Freddie Mac are totally f*cked. How that plays out will have an impact. Their primary purpose has been to create the mortgage liquidity in the market.

Credit is very tight and will probably stay that way for a while, hindering the ability to purchase homes.

There is a very large inventory of unsold homes. It takes lots of time to go through that inventory. As long as there is a large inventory of unsold homes...prices will stay weak.

All of this will play out in regions. Real estate is a totally regional industry. If certain sections of the country rebound those real estate markets will pick up faster than others.

I just don't think experts have a feel for where the real estate portion of the economic problems sits, the statistics don't show a couple of months or quarters of an upswing in the real estate business, nor do they have a feel for where we are in the midst of a downward then hopefully (and I believe it will occur) upward curve.

I suppose my reasoning is that the doomsayers that like to rip the American economy were crowing about rising commodity prices and the falling dollar just a short while ago. It appears that world wide recessionary impact has created some balance there fairly quickly. Commodity prices are flat or falling right now, rather than continuing to soar. The dollar has gained some ground against other currencies. Whether this stays this way or continues in this trend remains an unknown also.

Economies are cyclical. It is very hard to see when it turns. That is why I'm skeptical about whether we have hit a real estate bottom or not. (just my $0.02)

that is my $0.02.

 

here is an article that summarises much or most of the critical and latest information about the housing issues that have impacted the economy.

Most recent data shows that the overall drop in home prices have slowed. It also shows that in a few but increasing number of regions there have been small increases in home sale prices.

The issue I find disturbing and leads me to skepticism about a "current recovery" is the overall inventory of unsold homes.....

Not only is the rate (or 11.2 months supply of homes) higher than ever, but the overall inventory of unsold homes is the highest ever recorded.

Those are huge numbers. They will serve to dampen any recovery.

How fast this inventory is eaten up regionally and then nationally will ultimately define a recovery IMHO.

 

Earl, outstanding several posts.

 

Yeha nice posts Earl, thanks

 

Earl, this is an Ad Hominem, and I don't want to have that sort of debate. I can be just as, if not more, insulting as the next guy. That said, your claims about my lack of knowledge will have to be substantiated by facts, if you want to make your case based on attacks on my experience or character.

Again correlation is not causation. It's not a valid argument. A logical fallacy know as non-sequitur.

That is a strawman. Another logical fallacy.

Yes, and thousands of laws have bred millions of lawyers. I'm not sure what your point is. If the government has to regulate financial statements, why don't they just take them in, audit every company, and produce the reports? I mean, why write regulation and then police enforcement, when they could write the regulation and execute it themselves?

Oh yeah, because that would be fascism. Or a stronger manner of such than we see today.

Is there a point to this, or just to hurl insults in the absence of a meaningful position or argument?

Ad hominem.

I will come back to this at the end of the post, and address costs outside section 404. Contrary to what has been posted, not all costs are contained in section 404, although that clearly was the case of your previous posting.

As I said, I will come back to this. You're digging a deep hole, and my recommendation is to stop digging post haste.

You wrote this decade, then you wrote in decades in the same paragraph. The great thing is, the differences of singular and plural aside, both of your statements are false.

You said,

and then this

in the same paragraph. Both phrases say the same thing, and go back to my original statement. You cannot prove that there is less regulation now than there was in the previous decades or 40 years (4 decades to be precise). Your statement is as usual, one of opinion, not of fact. Unless you have some way to quantitatively prove how much regulation or effect regulation did or did not have over the last 40 years or decades

And that said, you're again arguing against yourself. First you say that there was less regulation in the last decade, specifically now, and then you argue that SOX (which is regulation) has stopped all sorts of companies from going under due to bad accounting practices. So which is it? Are we unregulated or better regulated?

You can't have it both ways.

I appreciate this is your opinion, but if I recall correctly, you neither understand the mechanics of fractional reserve banking, or how money is created. So to have any statement on monetary policy, not knowing these two basic facts seems to me to be a lucky guess.

For example, do you think fractional reserve banking is ethical? Do you think the current reserve ratio is too high, too low, or just right?

Second, do you believe that the government should be able to monetize debt? If so, should there be any limits on it?

Third, do you believe that increases in the money supply cause inflation? If not, then how do you explain rises in aggregate wages and prices if the supply of money stays fixed?

Fourth and lastly, when new money is created and enters the market, who gets it first?​

This is all ad hom and strawmen. You don't actually understand Austrian Economics, and thus your criticisms are just conjecture. Let's break it down.

• Ignores real hard facts. How?
• Purposefully misstates real hard data. Such as?
• Promotes an aspect of economics that is less than introductory Economics 101. Is that why Hayek won a Nobel Prize and Mises was the principal economic adviser of Austria? You're going after Bastiat, Menger and a host of other legendary economists with this statement.
• Disregards the impact of imperfect markets. Actually, you're very wrong on this, but again probably because you do not understand Austrian Economics. Austrianism doesn't deal with perfect or mathematical markets. It specializes in imperfect markets and microeconomic analysis. That's actually it's bread and butter.
• serious inequalities etc etc. I think this is pretty conclusively addressed by Austrianism. I'm curious how you came to make this statement. Mises and Hayek predicted the Depression, the failure of Bretton Woods, 70s stagflation, and the collapse of the Soviet Union with a worthless paper currency. I think they seriously understood not only money but also human action, or praxeology, which is the study of why man acts, and thus why man acts individually, and cannot be modeled collectively because you have millions of market actors acting separately, gauging their needs, wants and means differently, in realtime.

Interesting strawman. It shows you may have been listening with one ear, or reading with a monocle.

Libertarianism is about individualism. It constantly preaches personal responsibility. Libertarians don't all blame government, but the more radical ones do. The less radical libertarians realize that government is supposed to be a servant, and not a master. Big government, serves only itself.

I don't think libertarianism calls people stupid, but it doesn't seek to socialize the costs of stupid decisions. If someone gambles all of their money away, or chooses not to work, libertarianism rejects that such a party is entitled to confiscate wealth from everyone else to subsidize their losses. It says that if you took out a mortgage you can't afford, on a house that is 3 times larger and more expensive than what your wage and savings would dictate, it is not fair for you to get to keep the house when you can't pay your bills, and force every other citizen to pay your mortgage with taxes and inflation.

What libertarianism says, is that to give is charity, to take is theft. Even if the taking is decided by democracy, theft is theft, whether 1 person chooses to rob you, or 100 million.

You're entitled to your opinion. I'd just be wary of presenting your opinions as fact, because I have shown several falsehoods, contradictions and illogical rhetorical devices in your last post. It's certainly not a college grade argument.

Ahhh yes. The part we have been waiting for.

I'll reference from here http://en.wikipedia.org/wiki/Sarbanes-Oxley_Act

Point 1 - Regulation hurts competition (http://en.wikipedia.org/wiki/Sarbanes-Oxley_Act#Analyzing_the_cost-benefits_of_Sarbanes-Oxley)

Foley & Lardner Survey (2007): This annual study focused on changes in the total costs of being a U.S. public company, which were significantly affected by SOX. Such costs include external auditor fees, directors and officers (D&O) insurance, board compensation, lost productivity, and legal costs. Each of these cost categories increased significantly between FY2001-FY2006. Nearly 70% of survey respondents indicated public companies with revenues under $250 million should be exempt from SOX Section 404.​

Btw, for those following along, higher total costs, are a barrier to entry. The higher the cost of entry, the less competition you have. Keeps the big boys fat and rich, and keeps the small guys out of the market.

Point 2 - Regulation (total costs) hurt small business more than large business (http://en.wikipedia.org/wiki/Sarbanes-Oxley_Act#SOX_404_and_smaller_public_companies)

The cost of complying with SOX 404 impacts smaller companies disproportionately, as there is a significant fixed cost involved in completing the assessment. For example, during 2004 U.S. companies with revenues exceeding $5 billion spent .06% of revenue on SOX compliance, while companies with less than $100 million in revenue spent 2.55%.[23]​

So we go back to Earl's 0.36%. If you are a big company, with massive overhead and capital capacity for management, you pay 6/100 of a percent. Or $6 on every $10,000. A small company, a startup or a independent firm, pays $255 on every $10,000. For those of you arithmetically challenged, the cost to small business is over 40 times greater for section 404 compliance. So while the average may be $40 on every $10,000, the little guys are paying 6 times that.

Of course, most regulation is written by lobbyists and corporations, politicians merely introduce it, and rarely are experts on the legislation that bears their own name. Now with the small firms paying 40 times as much in compliance costs, who do you think paid for the legislation to be written? Big business, or small business?

Good try Earl. Always fun debating with you.

 

Well, now that I am back from a trip - did you get my Email Guerilla? I think it has two things that would really help this topic

 

lol, I just saw it. I don't know how I missed it before.

Thanks!