Allow me to ramble for a few minutes......
Wow, December 1st. This year positively flew by. Did anyone think we would be where we are? The economy is in shambles, the government is trying everything short of dropping a nuke to stop the collapse. Paulson, Bernanke and the rest of the financial "experts" are changing direction faster than a yo-yo. They're all a bunch of freaking retards.
It's official we are in a recession and have been since last Dec. Is that the biggest "no duh" in the lost sad history of economics. Really, did anyone not know this. Yet the stock market reacts like is taken by surprise, the shock of all shocks. And what's up with the stock market these days. Up 5% down 7%, that's fine for a year but geez this is happening daily.
Wamu is getting ready to axe 9200 workers after being taken over by JP Morgan.
Unemployment in going through the roof. Currently nearly 10% in the IE
We are nearly 11 TRILION dollars in debt as a nation. Much, much more if you count future obligations like Social Security, Medicare etc.
The banks are now stating that they plan to reduce the amount of credit card exposure they have by 2 Trillion over the next few months. That means they will be closing accounts, reducing account limits and increasing interest rates. That's great news except when the guy in front of you at McDonalds is trying his 4th card in an attempt to buy his Big Mac and Fries. Don't laugh that happened to me a few weeks ago.
What about those Car Companies? Now they want a bail out. Eh, NO! WHo cares if GM goes belly up. That just means that Nissan, Honda and Toyota will build more cars in the US to take up the slack. Let the profitable companies stay in business. Let the rest fail. As a taxpayer I don't want tax money going to car companies just because they are "American". Give me a break, 90% of the parts are made overseas and when I call Chrysler customer service I end up speaking to Rasneesh in Bangalor.
The real estate market has definately been ineresting this last year. It went from, stick a fork in it dead, to almost normal numbers in some areas. Of course the market is now foreclosures and not much else. With all the other problems I'm surprised that homes are selling at all.
We have 30 more days of 2008 and after the last 11 months I don't think anything can surprise me now.
6 comments:
I say that the united states needs to file bankruptcy...and start all over again
Since we're rambling, here's mine.
The IE economy has a larger "growth" component than most parts of Southern California. MTV and video game workers in Santa Monica don't need people to move there to make money. Framers, cabinet makers and graders from the IE do.
That doesn't mean that other parts of SoCal won't feel the recession - most businesses will - but the growth component of the IE economy is more cyclical and has been devastated. Job losses at MTV or Take Two will be small beer compared to job losses in the construction trades in the IE.
But rapidly falling home and land prices in the IE are restoring the region's main competitive advantage - affordability.
The IE has shortcomings that we all know about - smog (though getting better), a bit worse weather (still better than 95% of America), long commutes to jobs, etc.
To compensate for these shortcomings and attract new residents, the IE needs to offer bargain home prices. That relative bargain disappeared in the last 5 years (name your villian, there were plenty), but it is quickly being restored.
I have no idea how deep or long the current recession will be, but I'd guess that on a relative basis, the IE economy will start feeling more average versus the rest of Southern California in coming quarters. That will be a huge improvement from that last year or two.
I agree the IE will feel the recession worse than LA or OC. But I don't think they will be that much better off. I work in the OC and it's very obvious that people are not spending money there either.
The unemployment numbers are worse than reported too. People that have used up their benefits don't show up and most of the job losses in the construction trades don't even show up either. Most of those laborers are undocumented or if they are legal they are working as independent contractors and not eligible for unemployment benefits.
The IE's economy is linked to the rest of the US. Our primary mfg industries are recreational vehicles, boats, RVs, and stuff like that. The other big employers are warehouse and distribution. If the rest of the country isn't buying then we will not be making boats or shipping tennis shoes.
Let me ramble......
The IE will have "de-growth". Rising costs and inflation will force an exodus of illegal workers back to their homelands. Losses of revenue will force State and local budgets to shrink to essential functions. Low income, no income poor will have to replace illegal immigration employment as they loose social services.
Entire housing tracts will be plowed over to raise crops. Exurbia will die out. Population centers along the coast will get denser. Crops will move closer.
When things get bad enough "affordability" quickly turns into "not worth it in the first place".
This won't happen overnight but it also won't take a generation either.
Exurbia will die out??? Yeah, just like the era of cheap gas is over. Oh wait, I just paid $1.80 a gallon. Or housing only goes up in value.
You obviously didn't get the memo. Deflation is now a major concern not inflation.
I sure as hell am not going to live in a densely populated area along the coast in a high rise apartment building. Think of the traffic that would create!
Everybody needs to stop with the "It's the end of such and such". It is not the end of suburbs. Also it is not the end of America either. If it is, why is everyone putting their money in US Treasuries which in turn is driving up the value of the dollar? (6 months ago it was the end of the dollar, too) Foreigners have more confidence in our system than others and they are putting their money where they know they will get repaid.
As a percentage of GDP our dept is still lower than many other industrialized countries (Wiki). France, Canada, Germany, Norway, Japan all have higher debt to GDP ratios than the US. So should they declare bankruptcy too?
Stop the sensationalist media headlines. It's called a business cycle. We are at the low end of the business cycle and in a year or two we will be working towards the top of the next business cycle.
Jeff,
If your hanging your hopes on debt to GDP ratio remember that this measure is a ratio. If GDP falls than the debt goes higher in relation.
70% of US GDP is consumption. That would mean the velocity of our debt burden would outstrip the other nations with more balanced economies.
I am of course making the crazy assumption that Americans will be consuming less in the future. Everyone else will also do the same, but they won't see stagflation accelerate as fast as we will. The debt ratio in the first depression went ballistic because GDP went into the toilet. The size of the debt did not grow as fast, and most of it was wiped out in actual losses. This time we are keeping the debt on the public books.
Sure everyone heads for the safety of the high ground (US Treasuries) when chaos reigns. And those foreigners you say are still rushing to buy them are putting onerous conditions of future participation. Japan wants "Carter Bonds" paid in Yen, China and others talk about lowering their reliance on our debt. Other nations are selling reserves to pay for domestic stimulus spending.
We sold them 2.3 Trillion that they still hold and next year we (thats' you and me, Jeff) expect them to buy 3-5 trillion more. Oh and if you look at the bid/ask ratios for recent treasury sales it don't bode much hope for doubling their desire for more.
But are you really safe if everyone is in the same boat. Especially when it has a leak and the Captain (Paulson) hands out more oars instead of bailing pails. Telling everyone that they won't sink if they can row faster to the horizon. A goal, by the way that you can never achieve.
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