United States Heading towards a Depression?

Why would China want to come in? They're so heavily invested in the dollar they're having their own inflation just trying to prop our dollar up.

Consider the rhetoric of our politicians when they start demanding that China "float" its yuan - they're really just saying that the dollar isn't falling fast enough. The sad fact is that a crashing dollar is more politically viable than the corresponding spending cuts or tax increases.

 

Right, so cashing out makes sense. Convert to tangible assets. Maybe even productive ones (revenue bearing).

The Yuan floats, Walmart prices will double, possibly triple. No one is going to demand that China float it's Yuan. No one with half a brain.

Exactly. They are holding the funds, holding, holding....

Until they can swoop in at rock bottom prices and buy up America.

 

Great article from Gary North on LewRockwell.com

The Fed's Desperation Move
http://www.lewrockwell.com/north/north613.html


Great line

Excerpt

 

I dunno, didn't the Japanese try that once? It didn't work out too well for them.

 

Yeah, nothing like a lead based carbonated beverage and dog and cat big macs...

 

Looks to me like Paulson's Plunge Protection team bailed out the Dow today. No way the market moves in tandem between indexes early, and by the end of the day, only the Dow posts a modest gain, with the other major indexes posting significant losses.....

...

Why Aren't We Furious?
At the thieving Fed, and all its enablers and co-conspirators?
http://freedominourtime.blogspot.com/2008/03/why-arent-we-furious.html

.....


Bailout: The real March Madness
Bear Stearns is saved by JPMorgan Chase and the Fed keeps cutting rates to help other banks. But consumers get hurt as savings rates plunge.
http://money.cnn.com/2008/03/17/markets/thebuzz/index.htm

Two good articles on the shaft by the FED of having our wealth diluted to save the big banks. Both are great reading.

 

Too many sectors in the US are very profitable for there to be any danger of a depression. You can't look at the lending industry and make sweeping claims.

 

The Fed said today that output at US factories, mines and utilities dropped by 0.5 percent in February, the biggest decline since a 0.6 percent fall last October.

Daniel Meckstroth, chief economist for the Manufacturers Alliance/MAPI, said he believed that the manufacturing sector fell into a recession in October and the overall economy followed in December.

http://news.yahoo.com/s/ap/20080317/ap_on_bi_go_ec_fi/economy_23;_ylt=Ak7MRABEnQ_9rHDL0i65SAqb.HQA

 

And how does the current rate compare to say 1,2,5 and 10 years ago?

 

Lending, investing, banking, housing, retail, manufacturing...

The good news is, we're probably still doing well in defense spending. So as long as we are at war, we will be able to use up the bullets, munitions and more that we make.

 

Well, this is depressing, although not entirely unexpected

US economy loses its No 1 spot
http://www.news.com.au/business/story/0,23636,23378868-462,00.html

Kinda strange to see someone from Brisbane in the comments remarking on the inevitability of the Amero.

 

Me, myself and I.

Housing is dropping because it was artificially inflated. People were buying houses they couldn't afford for prices that were bogus to begin with.

Because money was so easy to get, people were borrowing money and spending it on stuff which lead to a boom in manufacturing trinkets and selling trinkets.

Now banks have figured out that they shouldn't give money to people who can't afford it.

It's a correction. Not a depression. It would be a depression if the banks hadn't artificially inflated the economy.

That's why you have to look at historical numbers. Not just short term change.

 

Congratulations. You are now only 20 pages behind on this thread. Keep reading!

Uhm, yeah. But you can combine that with the offshoring of manufacturing in the last decade to Asia, as well as the NAFTA affect that has Mexico booming in the automotive industry.

Oh, I'm pretty sure the banks new that before.

Well, the Depression was a correction as well. For WWI and the inflationary Roaring 20s.

This is more than just a correction. The FED doesn't slash rates in emergency sessions (particularly on a Sunday) for a correction or recession.

The FED doesn't create $200 billion asset swap schemes, or Congress $180 billion tax refund bills in a recession.

Bear Stearns was on the Wall Street's finest, winning awards as recently as last year, and existing for almost 100 years. Their stock dropped from $70, to $30 until they were agreed to sell for $2 a share on Sunday.

I don't need to go on and on, but suffice it to say, this has the potential to be one of the biggest events in American economic history.

Hunh? This is incorrect. The Banks did inflate during the 20s, and then fell susceptible to margin calls and being under capitalized, which resulted in many failures.

Historically, there are as many parallels as differences. I'd rather we didn't have a depression. It would be great if the government got out of the way and let the correction occur, so we can get back to building prosperity, instead of subsidizing bailouts and ponzi schemes.

 

The current crisis is an insolvency crisis not a credit crisis. More credit is not a solution.

 

Agreed.. The best thing to do is let those that are not solvent collapse. They will be absorbed and will reemerge. Let the system take care of itself.

 

Well the markets are pricing in a 50-100 point cut anyway, the markets rebounded today on new dollar lows. Politicians and Fed chairs are making the rounds on TV, saying the Federal Reserve doesn't have enough power to "fix things." As long as the markets are looking for a government solution to the economic problem, I'm staying bearish. When someone really gets traction by recommending that bad firms are allowed to fail, I will start expecting a real rally that doesn't come out of the dollar.