The Recession . . . .

[rwarn17588]

I've been talking to a friend of mine about this over the last few weeks. It may sound off-topic, but it's not.

The United States will probably pull out of Iraq in 18-24 months not because there's going to be a change in the Oval Office.

The U.S. will pull out because it can't afford it.

Those big deficits the government is running up certainly are a factor in the weak dollar and a host of other economic ills. We're spending at least $200 billion a year in Iraq, with little to show in the way of Iraqi reconciliation. Even Gen. Petraeous admits this.

It's eventually going to come to this question: "Why the hell are we still spending tons of money in a country that doesn't WANT to improve itself or is too psychologically damaged to do so?"

It's going to be a tad ironic that after all the posturing about "Islamofascism" by hawks and hand-wringing by doves, the decision to scale Iraqi operations way back will be done not because of tactics or policy change, but because it's a bottom-line decision.

[FOTD]

But I was preying on the faith based economy to also win the war for us....right rhymnrzn?

[cannon_fodder]

quote:Originally posted by rhymnrzn

Proverbs 23:4

"Labour not to be rich: cease from thine own wisdom. (5)  Wilt thou set thine eyes upon that which is not? for riches certainly make themselves wings; they fly away as an eagle toward heaven."

I never understood why biblical figures speak in middle English.  Apparently it was appropriate to translate from Greek to Latin and then to Old and Middle English... but then they stopped?  Really, it's not even middle English really. Its faux middle English.

What giveth?

quote:God said
Every one that is found shall be thrust through; and every one that is joined unto them shall fall by the sword. Their children also shall be dashed to pieces before their eyes; their houses shall be spoiled, and their wives ravished.

Isaiah 13. 13-19

If random biblical quotes are the answer, I say we go kill some men and rape their women!

[Conan71]

Ezekiel 25:17 according to Jules Winfield:

"The path of the righteous man is beset on all sides by the iniquities of the selfish and the tyranny of evil men. Blessed is he, who in the name of charity and good will, shepherds the weak through the valley of darkness, for he is truly his brother's keeper and the finder of lost children. And I will strike down upon thee with great vengeance and furious anger those who would attempt to poison and destroy my brothers. And you will know my name is the Lord when I lay my vengeance upon thee."

[we vs us]

Look at the brain on Brad!

[rwarn17588]

I'm sorry; did I break your concentration?

[mrhaskellok]

Everyone needs to start reading about fractional reserve lending.

The reason given by the fed for continuing to bail banks out is, that upon studying the depression, they found that they could have saved some of the banks if the banks had an institution whom they could borrow from.  Ergo, the Fed.  (Federal Reserve Bank)

Anyone wonder why our CPI has done what is has since the creation of the FED.  Can't say I am encourage to know they "have everything under control".

And now, the Canadian dollar is worth more than ours.  Lovely. (as they say)

Time to start teaching real economics in our schools again, like saving and not lending money built on debt.

From wiki article on frational reserve lending
Fractional-reserve banking, by expanding the money supply, implies that interest rates will be different than what they would be in a full-reserve system. Austrian School economists point to the role of the interest rate as the price of investment capital, guiding investment decisions. In their view, the "natural" (free of government influence) interest rate reflects the actual time preference of lenders and borrowers. Government control of the money supply through central banks and regulations allowing fractional-reserve banking disturbs this equilibrium such that the interest rate no longer reflects the real supply of and demand for investment capital. Austrian School economists conclude that, if the interest rate is artificially low, then the demand for loans will be higher than the actual supply of willing lenders, and if the interest rate is artificially high, the opposite situation will occur. This misinformation leads investors to misallocate capital, borrowing and investing either too much or too little in long-term projects. Periodic recessions, then, are seen as necessary "corrections" following periods of fiat credit expansion, when unprofitable investments are liquidated, freeing capital for new investment. The business cycle theory was recognized by the Royal Swedish Academy of Sciences, which awards the Nobel Prize in Economics[1], but is not universally accepted; at least one mainstream economist, Paul Krugman, considered it unworthy of serious study.[17] A few Austrian School economists, such as Pascal Salin, also suggest that a full-reserve banking system should not be enforced and rather simply root for free banking.

[cannon_fodder]

Currency fluctuates don't concern me too much.  While I enjoy having the preminant currency in the world, it is harmful to our manufacturing.   We are gaining an advantage in many areas because of it...  the merits of which may or may not offset the negatives.

Just sayin', the system is entirely intertwined and complex.  Each negative also has a positive impact... even if it is not immediately clear.

[FOTD]

quote:Originally posted by mrhaskellok


Everyone needs to start reading about fractional reserve lending.

The reason given by the fed for continuing to bail banks out is, that upon studying the depression, they found that they could have saved some of the banks if the banks had an institution whom they could borrow from.  Ergo, the Fed.  (Federal Reserve Bank)

Anyone wonder why our CPI has done what is has since the creation of the FED.  Can't say I am encourage to know they "have everything under control".

And now, the Canadian dollar is worth more than ours.  Lovely. (as they say)

Time to start teaching real economics in our schools again, like saving and not lending money built on debt.

From wiki article on frational reserve lending
Fractional-reserve banking, by expanding the money supply, implies that interest rates will be different than what they would be in a full-reserve system. Austrian School economists point to the role of the interest rate as the price of investment capital, guiding investment decisions. In their view, the "natural" (free of government influence) interest rate reflects the actual time preference of lenders and borrowers. Government control of the money supply through central banks and regulations allowing fractional-reserve banking disturbs this equilibrium such that the interest rate no longer reflects the real supply of and demand for investment capital. Austrian School economists conclude that, if the interest rate is artificially low, then the demand for loans will be higher than the actual supply of willing lenders, and if the interest rate is artificially high, the opposite situation will occur. This misinformation leads investors to misallocate capital, borrowing and investing either too much or too little in long-term projects. Periodic recessions, then, are seen as necessary "corrections" following periods of fiat credit expansion, when unprofitable investments are liquidated, freeing capital for new investment. The business cycle theory was recognized by the Royal Swedish Academy of Sciences, which awards the Nobel Prize in Economics[1], but is not universally accepted; at least one mainstream economist, Paul Krugman, considered it unworthy of serious study.[17] A few Austrian School economists, such as Pascal Salin, also suggest that a full-reserve banking system should not be enforced and rather simply root for free banking.

Really? I tend to agree on education. But with rates so low I just wanna go leverage my life to the hilt....

[Double A]

quote:Originally posted by we vs us

Sorry. Thought it might be time to update the FOTD-only thread on the economy below.  

Greenspan, writing in the Financial Times, says we're in the worst financial crisis since WW2:

quote: The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the second world war. It will end eventually when home prices stabilise and with them the value of equity in homes supporting troubled mortgage securities.

Home price stabilisation will restore much-needed clarity to the marketplace because losses will be realised rather than prospective. The major source of contagion will be removed. Financial institutions will then recapitalise or go out of business. Trust in the solvency of remaining counterparties will be gradually restored and issuance of loans and securities will slowly return to normal. Although inventories of vacant single-family homes – those belonging to builders and investors – have recently peaked, until liquidation of these inventories proceeds in earnest, the level at which home prices will stabilise remains problematic.

Just thought you might like to know that it's pretty much official at this point.

Edit:  it occurred to me that, by saying "since the end of the second world war," what he's really saying is "since the Great Depression," which was still the economic situation when the US was entering the war.  Unless something obscure happened during the war years that I'm unaware of, I think that's what Greenspan -- in typical Greenspanese -- is saying.

Thank you captain obvious. Tell me something I didn't know months ago.

[Double A]

quote:Originally posted by rwarn17588

I've been talking to a friend of mine about this over the last few weeks. It may sound off-topic, but it's not.

The United States will probably pull out of Iraq in 18-24 months not because there's going to be a change in the Oval Office.

The U.S. will pull out because it can't afford it.

We could not afford it years ago. Get real.

[EricP]

What!? You mean we can't spend a billion dollars a nonsecond for 100 years in Iraq and live long and prosper as a nation?

[YoungTulsan]

quote:Originally posted by EricP

What!? You mean we can't spend a billion dollars a nonsecond for 100 years in Iraq and live long and prosper as a nation?

Right, the Fed inflates us out of our shortfalls and collapses- but even with the huge powers the Fed possesses, the markets are currently free enough that a lack of value eventually comes back around to bite us in the donkey.  That lack of value the Fed injected into the markets to keep things liquid, it circulates through the economy, and eventually someone loses out.  Same thing with Iraq and the World Empire.  There is a huge lack of value we are getting in return for the hundreds of billions we spend each year.  That lack of value ends up being a drain on the economy.

Unfortunately for the average person, the top players get bailed out, and the lack of value migrates in their direction.  Inflation hits, their savings become worth less, and economic strains can possibly lead to them losing their job or home.

[we vs us]

quote:Originally posted by YoungTulsan

quote:Originally posted by EricP

What!? You mean we can't spend a billion dollars a nonsecond for 100 years in Iraq and live long and prosper as a nation?

Right, the Fed inflates us out of our shortfalls and collapses- but even with the huge powers the Fed possesses, the markets are currently free enough that a lack of value eventually comes back around to bite us in the donkey.  That lack of value the Fed injected into the markets to keep things liquid, it circulates through the economy, and eventually someone loses out.  Same thing with Iraq and the World Empire.  There is a huge lack of value we are getting in return for the hundreds of billions we spend each year.  That lack of value ends up being a drain on the economy.

Unfortunately for the average person, the top players get bailed out, and the lack of value migrates in their direction.  Inflation hits, their savings become worth less, and economic strains can possibly lead to them losing their job or home.

Making more money available isn't a bad thing at this point.  Banks need that liquidity to stay solvent.  So much of their own is tied up in these iffy securities that they need the help to be able to pay out everyday withdrawals.

I don't usually quote comments from blogs, but two from a Metafilter thread on the Bear Stearns buyout really struck me as true statements about this moment in economic time:

quote: The problem with capitalism is that it requires greed to operate, and greed draws risky models and bad players. Government regulation and business ethics can keep the bad players and risky models in line, but at the end of the day, everyone wants more. posted by dw at 11:00 PM on March 16 [1 favorite]

and

quote: What we have now is socialized risk but privatized profit. It's the worst of both worlds, a giant system of serfdom. If Wall Street does famously, they keep the money. If Wall Street fails dismally, WE pay their salaries and make their losses good. So, rain or shine, they make out like bandits, while we get robbed. We never win in this situation. posted by Malor at 11:46 PM on March 16 [32 favorites]

I want to point out that I am a firm believer in capitalism, especially in some of the mechanisms behind it, and that I don't mean the comments above to get any of the more reactionary posters here all riled up.  

But the system is pretty screwy lately and it's high time for some constructive criticism.

[Conan71]

Wherever money is involved, there's greed. []