A World Recession

[cheerfulgreek]

I've noticed that a lot of places are closing an hour early, so I thought this would be a great topic to chat about. When I ask why early, I always get an answer "No one is buying right now". How bad is our economy? Then I look at how the United States is such a huge part of the global economy. It's like the economy has been unbalanced, because when Americans do spend, we spend more than we earn, and with the country running massive external deficits, I think our bad economy will spill over to other countries, if it hasn't already.

I think the way it will spill over to other countries is through trade.

Your thoughts.

[KAPital PHINUst]

Good topic. Glad you posted it.

I posted a similar topic last summer in another forum and it was either ignored or dismissed as "needlessly alarmist". I guess folk are paying a little more attention now.

To answer your question: How bad is our economy? Brace yourself for a second Great Depression, and that is no exaggeration. Read Warren Brussee's blog at amazon.com, which he updates around the 1st and 15th of each month tracking his predictions he wrote about in his book which has been to date for the most part rather accurate). His book is titled "The Second Great Depression."

Personally, I have suspected our economy was going to reach this point (and further), which is why I have been paying close attention to our economic downturn since early 2005.

But this economic situation have been the culmination of economic events which arguably started when President Wilson signed the Federal Reserve Act back in 1913, and the effects subsequently snowballed to this point in time now.

A good movie to watch is "American Zeitgeist", which is available via Google Video for free viewing.

But as for our economy, as Reverend Jim said on the TV show Taxi: "You ain't seen nothing yet".

[cheerfulgreek]

I agree, but I think trade will be a major problem. Think about it, if output and demand in United States fall, something (which we have yet to define) would happen in a recession. The results from this would be a decline in private consumption, capital spending by companies, and production would lead to a drop in imports of consumer goods, capital goods, commodities, and other raw materials. U.S. imports are other countries exports as well as an important part of their overall demand, which if effected, there would be a drop in their economic growth rates too.

The thing that kills me is how everyone is so afraid of China and Japan doing better than the U.S. I call bull on this. Several significant enonomies including Canada, China, Japan, Mexico, South Korea, and much of Southeast Asia are heavily dependent on exports to the United States. We are the worlds biggest consumers, so if our ecomomy is totally screwed, so is China's and Japan's.

[Educatingblue]

Originally Posted by cheerfulgreek

The thing that kills me is how everyone is so afraid of China and Japan doing better than the U.S. I call bull on this. Several significant enonomies including Canada, China, Japan, Mexico, South Korea, and much of Southeast Asia are heavily dependent on exports to the United States. We are the worlds biggest consumers, so if our ecomomy is totally screwed, so is China's and Japan's.

I have been wondering about this for a while now. As our national debt increases in addition to the recent mortgage crisis and now some Federal loan programs being discontinued, I wonder if European Union or Japan will surpass the U.S.

My husband and I are in the process of looking for a new house and as everyone knows it IS a buyer's market. Not surprisingly, the majority of homes we have looked at are pre-foreclosure are already in foreclosure. We looked at a nice sized house (not even 2 years old) last weekend and the owners were so desperate to make a sell, they have it listed at a ridiculously low price (3 bdrms, 2 1/2 baths, 2-story for $112,000!!).

I am very concerned about our economy and wonder how much more we will have to pay for goods and services. It will be interesting to see how some people who have gotten used to a "comfortable" lifestyle will adjust paying more for less and unable to keep up with the Jones'.

[KAPital PHINUst]

Originally Posted by Educatingblue

My husband and I are in the process of looking for a new house and as everyone knows it IS a buyer's market. Not surprisingly, the majority of homes we have looked at are pre-foreclosure are already in foreclosure. We looked at a nice sized house (not even 2 years old) last weekend and the owners were so desperate to make a sell, they have it listed at a ridiculously low price (3 bdrms, 2 1/2 baths, 2-story for $112,000!!).

Question, is the price really ridiculously low or has the price of homes in the area been historically artificially inflated?

I am very concerned about our economy and wonder how much more we will have to pay for goods and services. It will be interesting to see how some people who have gotten used to a "comfortable" lifestyle will adjust paying more for less and unable to keep up with the Jones'.

Indeed it will be.

[preciousjeni]

Originally Posted by Educatingblue

As our national debt increases in addition to the recent mortgage crisis and now some Federal loan programs being discontinued, I wonder if European Union or Japan will surpass the U.S.

The dollar is exceedingly weak right now globally.

[KSig RC]

Originally Posted by preciousjeni

The dollar is exceedingly weak right now globally.

Context is important here - it's weak compared to its historical strength, but it's not like Lira in 1995 or anything.

[preciousjeni]

Originally Posted by KSig RC

Context is important here - it's weak compared to its historical strength, but it's not like Lira in 1995 or anything.

I don't anticipate the dollar reaching that level of worthlessness, but it is certainly sliding. Things are going to get worse for us, but we have safeguards in place to avoid another severe depression. Let's hope we, as a country, wise up and learn how to sacrifice and practice self-discipline.

Now's the time to do whatever possible to get out of debt and start saving money. I recently heard that we're about to start experiencing massive auto repos (kinda like the house foreclosures). People need to open their eyes and stop lying to themselves.

[Army Wife'79]

I heard one of the first ways to determine a recession is to check with personal service people like manicurists and beauty shops. One of the first cut backs people will make is to stop having their nails done and getting their hair cut in longer intervals between cuts etc. I think we are headed for a recession. If people wouldn't live beyond their means, they wouldn't have all this debt. I was always told to "buy what I can afford, not what I want".

[preciousjeni]

Originally Posted by Army Wife'79

I heard one of the first ways to determine a recession is to check with personal service people like manicurists and beauty shops. One of the first cut backs people will make is to stop having their nails done and getting their hair cut in longer intervals between cuts etc. I think we are headed for a recession. If people wouldn't live beyond their means, they wouldn't have all this debt. I was always told to "buy what I can afford, not what I want".

I'd say the recession is currently in progress. It's not down the road anymore.

http://www.nytimes.com/2008/03/08/bu...=1&oref=slogin

[cheerfulgreek]

Originally Posted by preciousjeni

The dollar is exceedingly weak right now globally.

And a weak dollar will make matters worse. Already, the economic slowdown in the United States and the Fed's interest rate cuts have caused the value of the dollar to drop relative to many floating currencies such as the Euro and the Yen. The weaker dollar may stimulate U.S. export competitiveness, because those countries will be able to buy more for less. But like I was saying before, it's still bad news for other countries who rely heavily on their own exports to the United States.

China in particular is at risk, because so much of its double digit anual growth have relied on the exports to the United States, and since Americans are the worlds biggest consumers, and China one of the world's largest exporters, if Americans are reluctant to buy, where would Chinese goods go?

[cheerfulgreek]

Originally Posted by Educatingblue

I have been wondering about this for a while now. As our national debt increases in addition to the recent mortgage crisis and now some Federal loan programs being discontinued, I wonder if European Union or Japan will surpass the U.S.

My husband and I are in the process of looking for a new house and as everyone knows it IS a buyer's market. Not surprisingly, the majority of homes we have looked at are pre-foreclosure are already in foreclosure. We looked at a nice sized house (not even 2 years old) last weekend and the owners were so desperate to make a sell, they have it listed at a ridiculously low price (3 bdrms, 2 1/2 baths, 2-story for $112,000!!).

I am very concerned about our economy and wonder how much more we will have to pay for goods and services. It will be interesting to see how some people who have gotten used to a "comfortable" lifestyle will adjust paying more for less and unable to keep up with the Jones'.

We're not the only country that has experienced a housing bust. There are a few countries in Europe that lag slightly behind us. At one time we were experiencing a housing boom because of easy money and low long term interest rates, which were also plentiful in other countries too. Even for the countries that are experiencing a housing boom right now, eventually higher interest rates will put an end to it, leading to a domestic economic slow down for some and a recession for others.

[cheerfulgreek]

Originally Posted by preciousjeni

I'd say the recession is currently in progress. It's not down the road anymore.

http://www.nytimes.com/2008/03/08/bu...=1&oref=slogin

I agree.

[Coramoor]

...the sky is falling! Can I borrow an umbrella?

Quoting the NYTimes...are you smoking crack? Off the top of my head I can't name a bigger piece of tripe in the journalism industry.

[Educatingblue]

Originally Posted by KAPital PHINUst

[/b]

Question, is the price really ridiculously low or has the price of homes in the area been historically artificially inflated?

That is a good question. There are a few houses that are worth the price, but most homes in the north and on the west coast are definitely inflated when you can get the same thing in the south for a fraction of the cost. The best place to look for this is along the coastline or near any lake/body of water.