I hope they are wrong: United Panic
Most investors, businesses, and analysts, despite their deep pessimism about the consumer outlook, will be surprised by the length and severity of the consumer pullback.United Panic (Floyd Norris Blog, New York Times)The public is starting to discover the seriousness of the state and local fiscal position, but the magnitude and fallout of the developing nonfederal government crisis will prove shocking.
Many fear that the present financial mess is setting the stage for surging Treasury yields, and most will be surprised by how low yields will fall. . . .
House prices will probably fall another 20%. . . .
The emerging market sector of the global economy is facing more than a financial crisis; it is facing a depression, which unfortunately is likely to be uncontained and severe in many countries. . . .
Even if the recession does end before 2010, employment will continue to decline. It is likely to fall for another year or two as downsizing and restructuring persist. The unemployment rate is likely to reach 8.5% by the end of 2009 and will be near 10% before it reverses.
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Hope they're wrong? Heck, that's a walk in the park all things considered.
Shit! *runs away mumbling about job security*
I bet this means we won't be seeing too many more of those cupcakecar races around the streets of Cali....too obscure?
It's worth thinking over the echochamber effect of forecasters that supported the 'irrational exuberance' that lead to the current crisis, and ask whether the echochamber is still in effect in this doom-and-gloom moment.
There's plenty of bad news, but it's not worth piling on panic.
Ah. Good thing I quit my job before all this mess started up. Now I don't have to worry about job security.
They make a really good point:
>The underlying problem is not just that aggregate private loans are
>too large relative to bank capital; it is that they are too large
>relative to aggregate private income.
So, look at it realistically: Can the average family really afford a $400k home? No.
I just hope either candidate does not raise taxes, whether on the rich or the poor. It would be disastrous.
Alexeck: The question is, then, how would it be disastrous?
For the poor, it would endanger their health and well-being.
For the rich, it would endanger their yearly ski trip.
Someone needs to start some kind of organization that will be isolated from tumult of these turbulent times, and from which a stronger, more stable economy can emerge.
A kind of foundation, if you will.
Ah, the Fear Business is doing well I see.
#3: On the contrary, pretty soon the only entertainment available for most people will be cupcakecar races. People will trade bags of sugar* for admission to day-long spectacles involving speed trials, demolition derbies, and "jump the CEO" events (which amount to public executions since your average cupcakecar can barely leap one CEO, even a skinny one).
* For processing into ethanol cupcakecar fuel.
I don't think that people are going to truly realize the magnitude of this financial debacle until the Holiday season rolls around. Once business start realizing that their bread-and-butter (the holiday shopping season) is going to be drastically cut, is probably when all hell will break loose. Hopefully I'm wrong, of course.
That really isn't true. The situation is far more complicated. Have you ever noticed how most people seem to be "getting by"? Doesn't it seem a little odd that people who make 40,000 a year have roughly the same savings as someone who makes 80,000 or 120,000?
People are kind of dumb and tend to spend to their level. Someone can jump from 30k to 80k, and yet they never see the expected 50k (minus taxes) appear in their bank account. People spend up as they make more, and they do it almost without thinking.
There is danger for the rich. If you are making half a million a year, you probably own a big expensive house. The value of that house has probably gone into free fall. All of a sudden that 500k you make each year is not so much when you are shelling out sick property taxes, you investments have sunk into the pits of hell, and the value of your probably absurdly priced house has gone into free fall. You could actually find yourself handily screwed by debt with bills you can't pay. Rich people going into debt is not exactly rare, and it isn't always a shell game to get out of paying taxes.
Granted, you are in a better spot than a family making 40k. You can accept the massive loss (which is a nearly impossible psychologically for most humans, we hate loss) and radically slash your expenses. A family already eking by on 40k on the other hand doesn't really have much farther to fall.
The danger you have when this happens to the rich is a sudden freezing up of investments into financial markets and small businesses. The rich make up an absurdly large part financial life blood of the economy. Hurting them might make you feel warm and fuzzy, but you will likely feel less fuzzy when they invest less and credit dries up.
That isn't to say I support McCain's tax plan or oppose Obama's. I just don't look at Obama's as free money with no consequences as other people do. There is a price and cost associated with it that will be felt by all. Will the good out way the bad? Eh, I'll let reasonable men with PhDs scream red faced at each other as they fight over that one.
I'll still happily take Obama over McCain because I like my civil and social liberties and the value of those things is transparent even for people without PhDs in economics. I just don't expect rainbows to fly out of Obama's ass on inauguration day that make the economy suddenly healthy again.
Of course, this is all a moot point for me personally when it comes to voting. I live Cambridge, MA. I am pretty sure my vote doesn't count... hence why I won't settle for the lesser of two evils and will be writing in Cthulhu.
Chckn Lttl wsn't xctly wrng, th sky wll b rnng bds f ths cntns.
http://tbrktlgh.cm/
@8:
> Someone needs to start some kind of organization that will be isolated from tumult of these turbulent times, and from which a stronger, more stable economy can emerge.
> A kind of foundation, if you will.
Oh, there is such a thing. It used to be called government. Of course, nowadays this entity is just a part of the economy.
Oh well.
obliv1on,
I've suspended your account for repeated blogwhoring.
Of course it's going to get much worse. No one wants to tell you that. The entire system is a mess and a lot of smart people have been predicting collapse for decades.
I encourage you to consider your sources. People who make their living on us thinking everything is fine are the ones who said it was fine when it defied all logic, and who are saying we can fix it even as that defies all logic.
The biggest lesson I've gotten from all of this was that I was right: The credit system didn't make any sense and was doomed to fail. The more I learned about it, the more concerned I was, but the more my friends in that sector talked out their asses about how it all works out in the end. It didn't, and it doesn't.
Don't spend money you don't have. Your house is an expense, not an asset. Hell, your house is a LUXURY.
The only that really sucks for me with this whole mess is that I have most of our savings in USD, which is likely to be the worst for awhile...