Economy UP

“the people up here in Maine who can't afford their $600+ heating bills

who told them to have gas heat...take a couple months worth of heating bills and convert to electric

The people who are losing their jobs.

maybe it's just my state but we've had a net increase in jobs over the last two years

Truckers who are trying to strike this week bacause they can't afford to fill their vehicles

i don't really buy that the government is responsible for the higher fuel costs nor do they have an obligation to lower them

the people who need to move but can't sell their homes.

i'll give you this one...the housing market is in bad shape but that goes back to my earlier post...so many forclosures the market is flooded”

“The bigger point that you seem to miss if that she essentially had four or five months of almost no bites - when she is highly skilled and has had no trouble finding work before - to the extent of being headhunted by Fortune 500 companies.

I think that is the average for finding a new job now days. But see, again, we have to prepare ourselves for these things. Having a bank account with 6 months salary in it is the best safety net one can create for yourself. Is it easy to do? No, but it's not impossible either. Especially when you are at the level it sounds like she was at.”

“Moonglo: So Lott implies the recession as starting in July, 2000. He definitely says it was on during the 2000 election and was ignored.

To back this up, you give me a Wikipedia source that suggests that there is a good argument that the recession might have begun "within the final months of 2000 - sounds like the claim there was a recession on during the 200 campaign that was ignored is a bit of stretch.


Huh??? It does not follow.”

“y2, I'm still waiting to hear what that has to do with a recession. Maybe you're thinking of "depression"??
last edited: 4/03/08 8:16:34 AM”

“That was an award-winning post.�
Y2
11:09:28 AM
4/03/08

my point, smart @ss, is that unions are responsible for wages on low level jobs going up...look at the auto industry and how much of it is made overseas now”

“She's not going under Nigel - she's taken precautions and she has heathcare and what have you - but she's been looking for four or five months now.

But the bigger point is that while there are people here pretending nothing is happening there are other people who are under significant pressure.

Thirfty - that's heating oil - still cheaper than electricity.

Which state are we talking about - and two years is not really a timscale to be looking at, we're talking about the situation now.

Well true, but it doesn't mean people aren't suffering, you're telling me no-one is. I'm not even expecting a government solution, though I think there should be some effort to wean us off the foreign oil rather than giving tax breaks to big oil.

Housing..... well this is why there's a recession.

Like i said it's not all doom and gloom, but we shouldn't be pretending people aren't being effected by this.”

“4.8 %”

“Thifty - well the point is that maybe you can point to unions in relation to the decline of Detroit, but you can't blame them for third-world wages that big American firms can pay workers overseas.

An Sarge - she's never lost a job before as far as I know, she's always moved to better jobs.
last edited: 4/03/08 8:20:10 AM”

“The delinquency rate for all mortgages climbed to 5.82 percent in the fourth quarter. That was up from the 5.59 percent in the third quarter and was the highest since 1985. Payments are considered delinquent if they are 30 or more days past due.”

“Like i said it's not all doom and gloom, but we shouldn't be pretending people aren't being effected by this.�
Y2
11:17:20 AM
4/03/08

...and i agree with this and i think the government is doing the appropriate thing...i'm just worried that because it's an election year and the media is making a big stink about the economy that the government it going to get overzealous and go too far”

“So it's Bush's fault she lost her job now?

What company did she work for? Are they having layoffs of competent workers due to a recession?

4.8 %”

“There's more to it than that. At the heart of the problem is the fact that the average American isn't getting any better off, and yet we expect him/her to drive economic growth. It's been covered up by voer-relaince on credit and the housing bubble, but until we generate wealth for the median American then we're going to struggle.”

““The delinquency rate for all mortgages climbed to 5.82 percent in the fourth quarter. That was up from the 5.59 percent in the third quarter and was the highest since 1985. Payments are considered delinquent if they are 30 or more days past due.”

I think it would be interesting to see how many of these people still have cable tv.”

“Who is struggling? Your friend? What company fired her?”

“LOL@ nigal...where they gonna watch it”

“Bush bears some responsbility for a lack of regulation of the credit markets.

And the company is none of your business Sarge - I mean I know you have no idea of how big business works - but yes, lay-offs happen all the time and are often done by department in restructuring rather than by individual.

And your pitch that she isn't competant so it's her fault is going nowhere.”

“Each of them have an XBox too ... and don't forget those little PSPs. How much are the games for those things?

”

“Nigal - tricky to have cable if you don't have anywhere to put the TV.”

“Yeah, I'm tripping over the homeless on my way to work.”

“Maybe they have nice big home cinemas, so they think they've made it in life.”

“lay-offs happen all the time and are often done by department in restructuring rather than by individual.

right, but there's a reason why the one who are chosen are chosen and why others get to stay...i've weather several layoffs

i think sarge's point (god, am i defending him?) is you can't gage the economy by one example...we don't know enough about her situation, let alone if you are telling the truth, to blame it on a recession”

“Like my point earlier was Sarge - it's not happening to you so you ignore it. There are many many homeless people across America.”

“Bush bears some responsbility for a lack of regulation of the credit markets.

Bush bears HUGE amounts of responsibility for his spending policies but the credit markets are largely Congress's fault. We hear politicians decrying the mortgage lending crisis and how they wanna make it all better but they are the ones who created it when they forced lenders to lend to more people and people who were high risk.

I don't feel it's more government involvement that we need. It's less.”

“Thrifty - ok, you're not getting this. The entire division was gutted up to the boardroom. There was no 'well you're good, you can stay'. It went up to the CMO.

Though I guess this doesn't help with your 'blame everything on the individual' line of thought.
last edited: 4/03/08 8:38:45 AM”

“Like my point earlier was y2 ... you haven't answered any direct questions on your claims.

Just because there are "some" bad things to some people, doesn't mean the sky is falling.”

“you haven't made any point sarge - you're just ignoring the facts because they don't sit with your views.

And I'm not saying the sky is falling.

But given where America sits as a country avoiding total economic collapse is no test of failure or success.
last edited: 4/03/08 8:42:50 AM”

““Nigal - tricky to have cable if you don't have anywhere to put the TV.”

I think we are misunderstanding what you said Y2. You said, “The delinquency rate for all mortgages climbed to 5.82 percent in the fourth quarter.”

I wasn't taking delinquency rate to mean foreclosure where people are on the street.”

“And I'm not saying the sky is falling.

But given where America sits as a country avoiding total economic collapse is no test of failure or success.


LMAO!”

“well fair enough Nigal - I guess my wider point is not that there will be packs of starving homeless people roaming the streets, but that those trying to pretend nothing is wrong because it's not happening directly to them need to open their eyes.”

“I hate long cut and pasts but this one is well worth a read. It's an interview with David Walk, the outgoing Head Comptroller of the US government. Basically he is the top accountant for the country. If we don't wake up we will be doomed and the sky will fall.

March 4, 2007(CBS) When the stock market plunges like it
did this week, everyone pays attention. The man you're
about to meet says hardly anyone is paying attention to
what really threatens our financial future. Like an Old
Testament prophet, David Walker has been traveling the
country, urging people to "wake up before it's too late."

But David Walker is no wild-eyed zealot. As Steve Kroft
reports, David Walker is an accountant, the nation’s top
accountant to be exact, the comptroller general of the
United States. He has totaled up our government's income,
liabilities, and future obligations and concluded the
numbers simply don’t add up. And he’s not alone. Its been
called the "dirty little secret everyone in Washington
knows" – a set of financial truths so inconvenient that
most elected officials don’t even want to talk about them,
which is exactly why David Walker does.


"I would argue that the most serious threat to the United
States is not someone hiding in a cave in Afghanistan or
Pakistan but our own fiscal irresponsibility," Walker
tells Kroft.

David Walker is a prudent man and a highly respected
public official. As comptroller general of the United
States he runs he Government Accountability Office, the
GAO, which audits the government's books and serves as the
investigative arm of the U.S. Congress. He has more than
3,000 employees, a budget of a half a billion dollars, and
a message he considers urgent.

"I'm going to show you some numbers…they’re all big and
they’re all bad," he says.

So bad, that Walker has given up on elected officials and
taken his message directly to taxpayers and opinion
makers, hoping to shape the debate in the next
presidential election.

"You know the American people, I tell you, we've been to
13 cities outside of Washington with the fiscal wake up
tour. They are absolutely starved for two things: the
truth, and leadership," Walker says.

He calls it a fiscal wake up tour, and he is telling civic
groups, university forums and newspaper editorial boards
that the U.S. has spent, promised, and borrowed itself
into such a deep hole it will be unable to climb out if it
doesn’t act now. As Walker sees it, the survival of the
republic is at stake.

"What’s going on right now is we’re spending more money
than we make…we’re charging it to credit card…and
expecting our grandchildren to pay for it. And that’s
absolutely outrageous," he told the editorial board of the
Seattle Post Intelligencer.

You have heard this before, from Ross Perot 15 years ago.
You might have even thought the problem had been solved,
when President Clinton announced, "Tonight, I come before
you to announce that the federal deficit … will be simply
zero."

"Well, those days are gone. We've gone from surpluses to
huge deficits and our long range situation is much worse,"
Walker says.

"President Bush would argue that the economy is in pretty
good shape, unemployment is down, the deficit is actually
less than expected," Kroft remarks.

"The fact is, is that we don't face an immediate crisis.
And, so people say, 'What's the problem?' The answer is,
we suffer from a fiscal cancer. It is growing within us.
And if we do not treat it, it could have catastrophic
consequences for our country," Walker replies.

The cancer, Walker says, are massive entitlement programs
we can no longer afford, exacerbated by a demographic
glitch that began more than 60 years ago-- a dramatic
spike in the fertility rate called the "baby boom."

Beginning next year, and for 20 years thereafter, 78
million Americans will become pensioners and medical
dependents of the U.S. taxpayer.

"The first baby boomer will reach 62 and be eligible for
early retirement of Social Security January 1, 2008.
They'll be eligible for Medicare just three years later.
And when those boomers start retiring in mass, then that
will be a tsunami of spending that could swamp our ship of
state if we don't get serious," Walker explains.

To illustrate their impact, he uses a power point
presentation to show what would happen in 30 years if the
U.S. maintains its current course and fulfills all of the
promises politicians have made to the public on things
like Social Security and Medicare.

What would happen in 2040 if nothing changes?

"If nothing changes, the federal government's not gonna be
able to do much more than pay interest on the mounting
debt and some entitlement benefits. It won't have money
left for anything else – national defense, homeland
security, education, you name it," Walker warns.

Walker says you could eliminate all waste and fraud, and
the entire Pentagon budget and the long range financial
projections barely change, in what's shaping up as an
actuarial nightmare.

Part of the problem, Walker acknowledges, is that there
won't be enough wage earners to support the benefits of
the baby boomers. "But the real problem, Steve, is health
care costs. Our health care problem is much more
significant than Social Security," he says.

Asked what he means by that, Walker tells Kroft, "By that
I mean that the Medicare problem is five times greater
than the Social Security problem."

The problem with Medicare, Walker says, is people keep
living longer, and medical costs keep rising at twice the
rate of inflation. But instead of dealing with the
problem, he says, the president and the Congress made
things much worse just three years ago when they expanded
the Medicare program to include prescription drug coverage.

"The prescription drug bill was probably the most fiscally
irresponsible piece of legislation since the 1960s,"
Walker argues.

Asked why, Walker says, "Well, because we promise way more
than we can afford to keep. Eight trillion dollars added
to what was already a 15 to $20 trillion under-funding.
We're not being realistic. We can't afford the promises
we've already made, much less to be able, piling on top
of 'em."

With one stroke of the pen, Walker says, the federal
government increased existing Medicare obligations nearly
40 percent over the next 75 years.

"We’d have to have eight trillion dollars today, invested
in treasury rates, to deliver on that promise," Walker
explains.

Asked how much we actually have, Walker says, "Zip."

So where's that money going to come from?

"Well it's gonna come from additional taxes, or it's gonna
come from restructuring these promises, or it's gonna come
from cutting other spending," Walker says.

He is not suggesting that the nation do away with Medicare
or prescription drug benefits. He does believe the current
health care system is way too expensive, and overrated.

"On cost we're number one in the world. We spend 50
percent more of our economy on health care than any nation
on earth," he says.

"We have the largest uninsured population of any major
industrialized nation. We have above average infant
mortality, below average life expectancy, and much higher
than average medical error rates for an industrialized
nation," Walker points out.

Walker says we have promised almost unlimited health care
to senior citizens who never see the bills, and the
government already is borrowing money to pay them. He says
the system is unsustainable.

"It's the number one fiscal challenge for the federal
government, it's the number one fiscal challenge for state
governments and it's the number one competitive challenge
for American business. We're gonna have to dramatically
and fundamentally reform our health care system in
installments over the next 20 years," Walker tells Kroft.

And if we don't?

"And if we don't, it could bankrupt America," Walker
argues.

You’re probably expecting to hear from someone who
disagrees with the comptroller general’s numbers,
projections, and analysis. But hardly anyone does. He is
accompanied on the wake-up tour by economists from the
conservative Heritage Foundation, the left-leaning
Brookings Institution, and the non-partisan Concord
Coalition. The only dissenters seem to be a small minority
of economists who believe either that the U.S. can grow
its way out of the problem, or that Walker is over-stating
it.

"The Wall Street Journal for example calls you 'Chicken
Little,' running around saying that the 'sky is falling,
the sky is falling,'" Kroft remarks.

"Unfortunately they don't get it. I don't know anybody who
has done their homework, has researched history, and who's
good at math who would tell you that we can grow our way
out of this problem," Walker replies.

Federal Reserve Chairman Ben Bernanke validated much of
Walker's take on the situation at congressional hearings
this year, and so did ranking Republicans and Democrats on
the Senate Budget Committee. Senator Kent Conrad of North
Dakota is the Chairman.

Sen. Conrad thinks David Walker is "providing an enormous
public service."

Asked if he agrees with Walker’s figures and his
projections, Sen. Conrad says, "I do. You know, I mean we
could always question the precise nature of this
projection or that projection. But, that misses the point.
The larger story that he is telling is exactly correct."

Conrad acknowledges that most people in Washington are
aware how bad the situation is. "They know in large
measure here, Republicans and Democrats, that we are on a
course that doesn't add up," the senator tells Kroft.

"Why doesn't somebody do something about it?" Kroft asks.

"Because it's always easier not to. 'Cause it's always
easier to defer, to kick the can down the road to avoid
making choices. You know, you get in trouble in politics
when you make choices," Sen. Conrad says.

Asked if he thinks taxes should be raised, the senator
says, "I believe first of all, we need more revenue. We
need to be tough on spending. And we need to reform the
entitlement programs … we need to do all of it."

But he admits he doesn't think there's a consensus for
raising taxes.

"Any politician who tells you that we can solve our
problem without reforming Social Security, Medicare, and
Medicaid is not telling you the truth," Walker told an
audience at the University of Denver.

Over the next year, the nation’s top accountant will be
traveling to the early primary states, telling voters that
we need to begin raising taxes or government revenues and
put a cap on federal spending if we want to maintain our
economic security and standard of living.

"If you tell them the truth, if you give them the facts,
if you explain this in terms of not just numbers but
values and people, they will get it and empower their
elected officials to make tough choices," Walker argues.

Asked if he knows any politicians willing to raise taxes
or cut back benefits, Walker says, "I don't know
politicians that like to raise taxes. I don't know
politicians that like to cut spending, but I think what we
have to recognize is this is not just about numbers. We
are mortgaging the future of our children and
grandchildren at record rates, and that is not only an
issue of fiscal irresponsibility, it's an issue of
immorality."”

“So Moonie - I know you don't really understand this stuff so you belittle it as a problem - but a question for you.

What would have been the consequences of the collapse of Bear Stearns and why did people like Bernanke and Paulson think it so important to bail them out?”

“The recession is merely chickens coming home to roost.

People seem to have difficulty finding the dividing line between investing and gambling. I would hazard a guess that the majority in trouble were not conservative (pun intended) enough with their spending.

We all spend more than we have. Capitalism is defined by borrowing money to buy something we cannot afford immediately. But capitalism also implies risk of loss if what we borrowed to buy does not make enough money to pay back the loan. Borrow to buy a car so you can drive to a job that pays more, but if you cannot afford the car payments be prepared to lose it and take the bus.

Borrow to buy a house, but make sure you can afford the payments, or be prepared to lose the house.

Farmers have always walked the edge, good crop and all the prices are low, bad crop = no income. Gotta diversify the crop so something works.

Too many of those in mortgage trouble borrowed to the max, and then used the 19% interest credit card to borrow again to furnish it NOW!! rather than build a savings buffer.

Rainy days do happen, all investment advice is to not put all the eggs in one basket.
Housing has been booming, gotta end sometime . With stocks it is called a correction, with housing all those who were treating the housing market as a roulette wheel that always won got a rude awakening.

I work in computers, sometimes there is no work for me available, so I do something else until there is. Less money - sure, but enough to cover basic expenses. No new car for a while, Touch-up repairs to the house for a while, get a book from the library instead of going to the movies.
I have had a 3 year hiatus, councellor at summer camp, driving buses, running canoe trips, shooting coach, whatever but it paid the bills. Yes still had a dent in savings, but the concept is to do something, anything to go broke slower.
Start my new computer job next Monday, Yaaaay”

“Sounds like social programs are killing us.

Let's make more of them and expand them!”

“I think there's a great deal of truth in that Manuka - but while calling for individual responsibility there also needs to be a call for corporate responsibility and government responsibility.”

“There's some good points in Nigal's cut and paste too.

With the healthcare system the part that gets me is that we allow the private system to make vast amounts of money from keeping the healthy healthy, then the tax-payer has to pick up the bill when they age or become sick.”

“The wife, daughter and I tried to get into olive garden restaurant last night after getting her some soccer stuff at walmart.
Both parking lots full, long lines and it was a wednesday evening !!! I thought nobody had money to spend?
last edited: 4/03/08 8:59:11 AM”

“I work in computers - manuka

How tall are you dude?”

“but while calling for individual responsibility there also needs to be a call for corporate responsibility and government responsibility.

Corporate responsibility is fleeting and flows with the economy. The economy flows best when the government gets out of our way. I would think the founding fathers set up our nation for freedom of business, not governmental control. And it surely wasn't set up for the job of bailing anyone out.

Personally I think the government has as much business in business as it does in religion.”

“Borrow to buy a house, but make sure you can afford the payments, or be prepared to lose the house. Manuka

This is why we have such problems - no mention of the bottom line price of the house. Like leasing a car not buying a house.

Government should stick to it's strength "WARS", but should be paid for by the spoils of those wars. I forgot again, 'to the corps go the spoils' and the bills goes to the next ten generations.
last edited: 4/03/08 9:08:50 AM”

“I think you're right to an extent Nigal. Over time the free market delivers the best possibile growth - the only problem is that a seeming by-product of this, among other things, is a boom-bust-cyle.

In reponse governments try and temper the market with reglulation to try to moderate the effects of the bust on the country.

Too much government control can stifle growth, too little and you amost guarantee a cylical recession and potentially a depression as bubbles burst.

The trouble is that with so many people now in the world I'm not sure we're capable of dealing with another depression.”

“This is why we have such problems - no mention of the bottom line price of the house

people need to learn to READ what they're signing...my wife and i got an arm mortgage about 3 years ago but only after figuring out that we could handle the worst case scenario”

“A lot of the people signing up for these mortages have never seen house prices go down.

I was always seen as putting a downer of things in the past when I refered to the negative equity problems which his the UK after the ERM farce of the early 90s. Hardly anyone in the US has experience of this.

So they believed people when they said they could just refinance in a couple of years.

And I can't blame people for wanting to buy their own home and being told there was a way they could afford to.
last edited: 4/03/08 9:16:36 AM”

“Do you honestly think the banks want to do business with folks who are risky investments?

The government DEMANDED that banks issue sub prime loans or face sanctions. The Community Reinvestment Act passed in 1977 and beefed up in 1995, requires banks to lend to high-risk areas that they otherwise would avoid. Banks that fail to comply pay fines and have more difficulty getting approval for mergers and branch expansions.

Fannie Mae Foundation report enthusiastically singled out Countrywide for following "the most flexible underwriting criteria permitted." And now Countrywide is a demon for having such lax lending practices that the Fed made them their poster child for helping the poor enter home ownership?

Nice. The same federal government, and many of its boosters, now attack Countrywide for following the very policies that the government wanted earlier.

In addition to that, if I am required to do business in a high risk area with clients that I rather not do business with. I'm going to be damn sure to find a way to make money off of it. So then the banks built these complex financial structures in response. It drives me nuts that "wiser" banks were smart enough to concede the subprime market to the Countrywides of the world but weren't smart enough to not buy into the crap pool of collaterized debt obligations.

Y'all want to talk about one of the other triggers that no one is talking about? In late 2005 the comptroller of the currency started requiring banks to require minimum payments on credit card balances, causing increases of at least 50% for most cards and as much as 100% on others. Guess who normally holds subprime mortgages? People for whom a higher monthly payment on a credit card would be a problem.

Imagine that you're such a person and that before you always made sure you made your mortgage payments. With the new regulation, you instead make your credit card payment but miss your mortgage payment. I know that seems odd to pay on a convenience debt and not pay on a need debt (shelter) but that is what the banks are seeing people do.

Tack on a rate increase, an increase in energy prices, no increase in pay.....not good.”

“I think we can add stability to the economy by going back to the gold standard. We need to stop printing money. And many would argue that more government involvement only makes a bad situation worse. The last great depression we had was worsened and prolonged by the government's involvement in the form of the New Deal.”

“I know that seems odd to pay on a convenience debt and not pay on a need debt (shelter) but that is what the banks are seeing people do.

also what they're seeing people do is shutting their blinds, ignoring their phone and not getting their mail...most banks would rather work with a borrower than foreclose but so many of them just ignore the problem”

“Some people learned nothing from the S&L fiasco.”

“Nigal - I zipped through the long cut and paste, but I agree. I don't know enough to know whether the situation is as dire as Walker says, but it definitely worries me that we have on a spending spree while cutting taxes and going to war. I don't trust either party to address this.

The economic stimulus package agreed on by Bush and the Dems ("The Splurge") is a "hair of the dog that bit me" solution that would probably give a short term fix, but aid the transfer of wealth to China in the long run. I agree with Huckabee on that.

The success under Clinton in dealing with the budget was partly because Republicans blocked a lot of his spending plans. If a Democrat wins the White House, I hope the Dems don't win enough of the House and Senate to give them a free ride.”

“So they believed people when they said they could just refinance in a couple of years.

And I can't blame people for wanting to buy their own home and being told there was a way they could afford to.

When I bought my house I got it on an ARM with the plan to refinance in a few years. The first time it went up I refinanced and then refinanced again when it hit 5 1/4%. Not only did I get a better rate but I cut it from a 30 year note to a 15 year note. My payment is only $90 higher and my house is free and clear in eight more years.”

“that's great nigal...i think we're gonna look at doing that this summer...we were able to do away with the mortgage insurance with our last refi”