A World Recession

[cheerfulgreek]

I just want to elaborate on what you said Tom, (I'm still laughing) but right now I think there's an oversupply of housing, automobiles, and other consumer goods, but since no one is buying these days, demand for these goods are less sensitive to changes in interest rates, because it takes years to work these kinds of things out. I just think right now that the United States is facing a financial crisis that goes far beyond what you were saying. I think the problem falls into areas of economic life that the Federal Government can't reach. It's bad now because the problems the U.S. economy faces are no longer just about having enough cash on hand, it's just that we're too ill equipped to deal with the problem.

[Tom Earp]

Originally Posted by cheerfulgreek

I just want to elaborate on what you said Tom, (I'm still laughing) but right now I think there's an oversupply of housing, automobiles, and other consumer goods, but since no one is buying these days, demand for these goods are less sensitive to changes in interest rates, because it takes years to work these kinds of things out. I just think right now that the United States is facing a financial crisis that goes far beyond what you were saying. I think the problem falls into areas of economic life that the Federal Government can't reach. It's bad now because the problems the U.S. economy faces are no longer just about having enough cash on hand, it's just that we're too ill equipped to deal with the problem.

Okay!

But in a nut shell, we as a country are in very dire straits.

Over building of homes caused the price of wood to go up. People want to move on up, and the home they leave may or may not sell.

Talking with the head of our water division of our Power/water company, he made an interesting statement that I argued about, he said that even though there is a building boom in our county, the number of water meters stayed within 1% from where it as five years ago. I was flabbergasted to say the least.

As for cars, the bloom has been off of the rose for a very long time. Is it because of the rise of better made and designed cars from other countrys. Yes.

American cars used to change styles usually every two years and had many brands. They then became pasturized as each looked like the same.

GM began by dropping brand names: Olds.
Chysler is going to if they have not already: Plymoth and Dodge.

Many of the plants built different name brands on the same frame with little design change.

Now, even so called foriegn cars are built in America with American people. Car makers have been mortaging sales for years with the low or no interest rate. People do not buy a new car every year.

Clothes, electronics, shoes, etc are being built outside of America and re-imported back cheaper.

Bear-Stern with a Fed bail out is sending shock waves across the financial world. Country Wide one of the biggest was bailed out before filing bankruptcy.

To me, instead of this would be to just change the ARM for houses to fixed rates. Keep the companies afloat and still get some interest rate money into them. It dang sure would help the home owners, keep the dollar up and keep them in houses they live in.

Maybe to simple to do?

If I close my little store, I do not ahve money to pay for the house loan, so, then what happens?

[Coramoor]

Let the market work it self out rather than letting the gov't extending this for months/years to come.

If you have lived above your means, well now the bill is due.

[cheerfulgreek]

Originally Posted by Tom Earp

Okay!

But in a nut shell, we as a country are in very dire straits.

Over building of homes caused the price of wood to go up. People want to move on up, and the home they leave may or may not sell.

Talking with the head of our water division of our Power/water company, he made an interesting statement that I argued about, he said that even though there is a building boom in our county, the number of water meters stayed within 1% from where it as five years ago. I was flabbergasted to say the least.

As for cars, the bloom has been off of the rose for a very long time. Is it because of the rise of better made and designed cars from other countrys. Yes.

American cars used to change styles usually every two years and had many brands. They then became pasturized as each looked like the same.

GM began by dropping brand names: Olds.
Chysler is going to if they have not already: Plymoth and Dodge.

Many of the plants built different name brands on the same frame with little design change.

Now, even so called foriegn cars are built in America with American people. Car makers have been mortaging sales for years with the low or no interest rate. People do not buy a new car every year.

Clothes, electronics, shoes, etc are being built outside of America and re-imported back cheaper.

Bear-Stern with a Fed bail out is sending shock waves across the financial world. Country Wide one of the biggest was bailed out before filing bankruptcy.

To me, instead of this would be to just change the ARM for houses to fixed rates. Keep the companies afloat and still get some interest rate money into them. It dang sure would help the home owners, keep the dollar up and keep them in houses they live in.

Maybe to simple to do?

If I close my little store, I do not ahve money to pay for the house loan, so, then what happens?

Tom, I agree with you, but it's more to it than this. This goes back to what I was saying before in an earlier post about the housing problem. I mentioned that there are millions of households that are close to defaulting on their loans, and like I said earlier, I'm sure a lot of the subprime lenders are going to go bankrupt if they haven't already. This financial housing problem probably will spread, if it hasn't already to the kinds of loans that finance excessively risky leveraged buyouts and commercial real estate too. On top of this, if the economy continues to fall even further, I'm sure corporate default rates will rise, which will lead to even greater losses. Like you said, it's a chain reaction, but I just think it's much deeper than some of the things you've mentioned. I read the The Wall Street Journal a lot, and it's so easy to see these things happening, if they haven't already.

I think at one time American cars were deemed unreliable, but now I think they're better made and certainly better looking, I just think they're too expensive. The foreign automakers can build their cars at a cheaper cost, so they're able to sell them cheaper, plus they offer much better warranties, and since women are the biggest auto consumers in the United States, we want something reliable, and inexpensive. I don't know much about cars, but to me I think they all look very generic, it's not just American cars that look the same.

[cheerfulgreek]

Originally Posted by Tom Earp

If I close my little store, I do not ahve money to pay for the house loan, so, then what happens?

Then you'll be added to the millions of other households that are on the verge of defaulting on their loans, due to a totally screwed up economy, but I'll be positive and say that won't happen to you. Right?