The Economy

[TEEJ]

I think the mess really started around Truman's time...when we started to spend more than we made as a country....we had money reserves though, but we had commenced depleting the reserves....

...around by Reagan's time, we crossed over into the red, and were going into debt....which has continued to grow into the crazy string of significant figures we now refer to as the national debt.

If we as a country were a person, we'd have inherited a fortune, and lived beyond our means, wasting our fortune, and then borrowing enormous sums to keep up our standard of living.

Seems irresponsible.

Now, we owe China, Saudi Arabia, and so forth ENORMOUS amounts of money...which, can be considered to be leverage by them...if they need to move us in any desired direction.

Of course, THEY are heavily invested in OUR economy...so, when WE tank, they get dragged down too.

If WE stop buying, they stop selling...which means their registers are not ringing as they had been...and prices drop, etc.

If the problem was that the system needed 700 billion dollars more to work, fine, that might have fixed it.

I think its more like a bucket though...with suspected holes in the bottom.

The water drained out of the bucket, and we threw 700 billion in to re-fill it...but, the REASON the bucket was running dry, the hole(s), was not addressed in any meaningful fashion.

IE: What ever CAUSED us to reach this point will cause us to reach it AGAIN.

We NEED that bucket to put out this fire...but, the water is draining out on the way...and by the time we get to the fire, the 700 billion might have come in handy...but its already soaked into the ground, and unavailable...as we wasted it.

We did the same thing after the '29 crash...but, the situation was not the same...and, the value of the purchased commodities is not comparable. We bought junk...junk that was already tanking at a rate that LEAD to the collapse of the sellers of it.

So, sure, there will be SOME residual value, but, its NOT a good investment.

So - the new president will NOT see the economy recover in this term...unless its an artificial prop up, as a real fix would take too long.

His successor will potentially see the recovery, and, as history tells us, the successor will get all the credit for the fix done by his predecessor.

This means that whatever party wins, assuming they are blamed for the economy, will lose the next time around, and, the NEXT party will get credit for "fixing things".

The part that worries me, is that the Democrats tend to talk about "change", and the Republicans tend to represent security...so, the scarier the times, the more the Republican party gains...as change is scary.

That puts the Republicans about on target to "Save the Economy" a few years down the road, after "Years of Hardship under the Democrats"....or to "Finally save the Economy after YEARS of HARD WORK!"....if they win now, etc...


My 401K is about 2/3 of its starting value...but, I'm thinking that I don't actually lose any money UNLESS I sell. As long as it weathers the storm, when things improve, it will recover, and my retirement will be back on track.

Assuming I live to be 120 or so, and the economy recovers about as expected, I should be able to enjoy many weeks of retirement. igfly:

 

[RednekF350]

I also have a feeling there's probably some sort of contingency plan in place if the worst happens.

My contingency plan is more or less centered on venison and red wine.

 

[Tom]

My contingency plan is more or less centered on venison and red wine.

That's a good contingency. I, myself, just started a batch of Cabernet.

 

[Boyd]

I am, also, surprised more people aren't hitting BJs for a sack of rice, beens and canned meats just in case.

That's probably because they're still trying to finish off what's left from when they stocked up for the Y2K scare.

 

[Tom]

Wow, Dow futures down 550 points. The S&P futures trigger the limit down circuit breaker with futures being halted in Europe several times.

Will today be the real dislocation?

 

[grendel]

Is this some of the plan;

http://www.libertyforlife.com/jail-police/us-concentration_camp-locations.htm


"NEW JERSEY
Ft. Dix / McGuire AFB - Possible deportation point for detainees. Lots of pictures taken of detention compounds and posted on Internet, this camp is well-known. Facility is now complete and ready for occupancy."

Do you get a free tin foil hat with a membership to that outfit?

 

[bobpbx]

I am, also, surprised more people aren't hitting BJs for a sack of rice, beens and canned meats just in case.

Tom, it crossed my mind. But when I think of it I feel greedy, and it seems futile, as how long would I last on that, maybe 60 days?

Here is the big question for you--did you already put this plan into place at your house?

 

[46er]

WOLVERINES!!!!

'It's 11:59 on Radio Free America; this is Uncle Sam, with music, and the truth until dawn. Right now I've got a few words for some of our brothers and sisters in the occupied zone: "the chair is against the wall, the chair is against the wall", "john has a long mustache, john has a long mustache". It's twelve o'clock, American, another day closer to victory. And for all of you out there, on, or behind the line, this is your song.
[the Battle Hymn of the Republic begins to play] '

The next week might be interesting, just in time for the election. Listen to the last 2 that are interviewed on this video from CBS;

http://www.cbsnews.com/video/watch/?id=4544851n

 

[RednekF350]

Here is the big question for you--did you already put this plan into place at your house?

It's always in place at my house Bob.
Squirrels, duckies, rabbits, deer (roadkill or shot by me and the kids) fish and clams are always on the menu.
My credo: If it flies it dies and if its brown it's down.
I am hand grinding up a big batch of venison burger this morning for Mike to take back to college with him tomorrow.
Of course if society collapses and electricity stops flowing, my freezer won't be functional.
That's when I will switch to smoking and salting.
Except for the 2000 acres lost this week, there is still about 65,000 acres of wood out front for a fuel source.

 

[freerider]

http://wallstats.com/zoom/

.....Initially launched as TheBudgetGraph.com, Jess Bachman wanted to create a way to visualize and conceptualize the United States federal budget.........

 

[Tom]

http://wallstats.com/zoom/

.....Initially launched as TheBudgetGraph.com, Jess Bachman wanted to create a way to visualize and conceptualize the United States federal budget.........

That's a great graph. I had seen it months ago, but had forgotten about it.

 

[MarkBNJ]

But, the thing is, if conditions actually deteriorated to the point where you needed your cache, you would just become an irresistable resource for roving gangs of armed, hungry people. You would have to organize a larger community, say a few blocks worth, and throw up a wall.

Those who live in small, easily defended and well-defined villages and towns will have the best shot at establishing islands of order. They already know each other and have a community framework that could spawn the necessary changes in the required timeframe. Suburbs and rural farms will be plundered and burned, the inhabitants either turned out or killed. The cities will become raging madhouses where desperate millions tear each other to shreds for a mouthful, until some dreadful equilibrium is finally reached and the survivors inhabit the shells of condos and grow vegetables on the roofs. Individualists and survivalists will be rooted out of their holes and their stores taken by some gang. There is always power, and don't imagine that the collapse of society will hand any of it to you.

But of course none of this apocalyptic vision is coming to pass. Civilizations don't suddenly collapse (Easter Island noted as a possible exception). They decline in power and influence, and the ability to replace their populations and expand their economies. Other, hungrier young societies gradually become more important. Even amongst these changes the average person's life goes on rather the same. When people have needed to cache food and bury silverware in the past it has been because of invasion and war, or other outside influences exerting massive force (i.e. Vesuvius). We are not likely to suffer those things here, for various geographical reasons.

I don't think you're crazy. Extreme? Certainly. Some people need to feel that something like this could happen; that there could be some great, wrenching cataclysm that would suddenly alter everything and throw them into a new world. There have been plenty of them throughout the years, but not surprisingly, when we turn around and look behind us not all that much that we thought could change, has. The biggest problem I have with the attitude that leads to these speculations is the presumption that we are all at the mercy of "the system" and that we will all be thrown down if it fails. It's the other way around. We are the system. People wake up every day and need to eat, and get around, and teach their kids, and warm their homes, and all those little decisions they make are the system. It's been going on in the Western fashion for seven centuries or so, but now you think you see the end of it?

Write it down, my friend. If you're right, then you might be the Nennius or Bede of the 22nd century.

 

[Tom]

But of course none of this apocalyptic vision is coming to pass. Civilizations don't suddenly collapse (Easter Island noted as a possible exception). They decline in power and influence, and the ability to replace their populations and expand their economies. Other, hungrier young societies gradually become more important.

I am not expecting the end of the world. I am anticipating the end of the U.S. empire, something akin to the collapse of the Soviet empire...it is inevitable. When it happens, things will get much more severe here than they did in Russia. And, as I recall, things had gotten pretty ugly there.

 

[Sue Gremlin]

Crap. I'd better go grocery shopping.

 

[Ben Ruset]

I am not expecting the end of the world. I am anticipating the end of the U.S. empire, something akin to the collapse of the Soviet empire...it is inevitable. When it happens, things will get much more severe here than they did in Russia. And, as I recall, things had gotten pretty ugly there.

More McDonalds.

Corruption did them in more than a lack of the rule of law.

 

[Tom]

When people have needed to cache food and bury silverware in the past it has been because of invasion and war, or other outside influences exerting massive force (i.e. Vesuvius). We are not likely to suffer those things here, for various geographical reasons.

China may be just such an outside influence:

http://www.reuters.com/article/forexNews/idUSTRE49N1XX20081024

http://biz.yahoo.com/ap/081012/as_china_economy.html

http://in.news.yahoo.com/20/20081007/1424/twl-china-snaps-diplomatic-military-cont.html

http://www.reuters.com/article/marketsNews/idUSPEK16693720080925

And, what caused the Great Depression? It wasn't an invasion or Vesuvius, yet it resulted in long lines at the soup kitchens, a high unemployment rate and alot of foreclosed farms. It was a result of the crack up boom of the 20s and, then, the government intervention in the free market through agricultural price fixing during the 30s.

Today we are a debtor nation that is financed by foreign wealth. What happens when the homeowner defaults on their loan? The bank forecloses on the property.

 

[46er]

Makes you wonder where all the folks that are being displaced by foreclosures, and those that will be, are going.

Anyone here remember the riots back in the 60's; LA, Newark, Jersey City, Philly, Chicago, Washington DC and quite a few others? They occurred for a very different reason, but the point is, they occured.

http://www.1967newarkriots.com/blog/wp-content/themes/thesis/headers/header-2.jpg

 

[MarkBNJ]

And, what caused the Great Depression? It wasn't an invasion or Vesuvius, yet it resulted in long lines at the soup kitchens, a high unemployment rate and alot of foreclosed farms.

Yes, but even the "great depression" (a label which we use to cover several related events over a four year timeframe) did not bring the "American empire" to an end. I find it interesting that after six months of a falling dollar and pronouncements of doom from people like George Soros, our currency is once again the haven of first resort.

 

[Tom]

Yes, but even the "great depression" (a label which we use to cover several related events over a four year timeframe) did not bring the "American empire" to an end. I find it interesting that after six months of a falling dollar and pronouncements of doom from people like George Soros, our currency is once again the haven of first resort.

We didn't have a fiat currency then and we weren't an empire yet. We have no way to meet all of our obligations long-term (war, over 370,000 military bases and all the entitlement programs here at home).

Social Security, Medicare and Medicaid are enough to ruin us.

The dollar is up because of forced buying by hedge funds that have been forced to de-leverage. It is over-bought. When the forced buying is over, it will very likely fall hard and fast. http://www.reuters.com/article/businessNews/idUSTRE49O27H20081025

Also, if the rest of the world abandons the dollar as the reserve currency, which China and Europe are both discussing, then it will become nearly worthless.

 

[Tom]

I find it interesting that after six months of a falling dollar and pronouncements of doom from people like George Soros, our currency is once again the haven of first resort.

Here is a great interview with Jim Rogers. Soros' former partner.

http://www.thefinancialtube.com/video/1420/Jim-Rogers-1024