I'm sorry to make another thread regarding the financial crisis but I have to admit the ins and outs of finance are over my head and I'm feeling kind of lost with all the back and forth on this. I'm trying to boil down this crisis to something I can wrap my head around. Do y'all think we are in for another depression, why and why not?
I'm not that scared. I heard that a really, really experienced candidate for president said the fundamentals of the economy are strong. And that was just like a week ago. We ought to be okay.
No. Why? Because we are America, that's why... oh wait. Actually, I think we've been in a mild recession for months, and we're about to hit a real one. Depression? I doubt in the terms of the "Great" one, but who really knows?
the depression was based on a shortage of cash. Since we are printing money like crazy that cannot happen.
Wouldn't that lead to serious inflation that could also cause a depression? As I said finance is most definately not my strong suit but what I'm trying to understand is if there is a serious credit crunch could that lead to a cascade throughout our economy that leads to plunge in growth bringing on a depression? Possibly not the Great Depression but something much worse than the recessions that hit us in the early 90's and 70's..
Don't be part of the "nation of whiners," IROC it. If you don't clap harder you're part of the problem. Your own candidate said just last week that the fundamentals of the economy are strong. Why so negative?
McCain was talking about the American worker.... you know, the people who have seen their wages stagnate against inflation for the past decade, assaulted by skyrocketing health care, energy, and food costs. Those folks who are upside down in their mortgage and up to their eyeballs in credit card debt.
right?!?!? silly me Here I thought fundamentals meant things like dollar strength against other currencies, the personal savings rate, inflation, gross domestic product. That sort of thing
Why can't the fundemental issue be debt? I understand all the deregulation issues are politcal, but I don't think the Dems or Repubs really sqawked at all about this before this year. How many big old warnings have we heard last year from the rank and file Dems? or Repubs? None, unless you count Ron Paul as a Repub. The political parties were pushing for stretching the lending practices at Fannie and Freddie for years to make housing affordable, or rather should I say make getting a home loan easier for low income or credit risky buyers. Don't forget unsecured personal debt and govt. debt either. Just how must savings do the average American have? Or for that matter look at how much borrowing we are doing in ratio to GDP. The fundemental problem is the push to get people into housing opened the doors for way too many risky loans and you can't expect any industry that is making a killing short term to manage itself, especially when they feel invincible. And quite frankly lenders were having a hay day packaging and selling these loans... it is not much different than giving a credit card to someone regardless if they can make the payments when the card is maxed. The basic problem is we have let our economy be driven by debt. Why is everyone screaming now? Because if we can't continue to dig our grave in debt there will be no liquidity in the economy. In other words if we can't borrow money we can't spend money. Or to put it simply we must borrow money to make ends meet. Will there be a depression? Yes there has to be a contraction in the debt. Or a write off. Fundementally, you cannot possibly continue to borrow your way to prosperity. If you have to borrow to spend eventually you will have to borrow just to survive. Oh, I think that is where we are right now. A depression is exactly what happens when your basic living, and basic business expenses are borrowed and credit dries up. Now I am quite certain that more debt will be pumped into the economy and the bailout will grease the coming infusion so that credit markets can lend. The bailout will pass, probably Thurs. but it will only advert an immediate hard recession so that the depression is put off a little longer. What happens when this govt. credit bubble breaks? Depression. Eventually all credit economies come to the point where they cannot sell their debts off and even an economy as great as ours just doesn't have the strength of resources and value to rescue debt load. Like I have said when you add up govt. debt and personal debt together and you place that burden on the taxpayer, it is going to come hell to pay at some point. So lets hope for the bailout and prepare for the eventual end play. We just may be past the point of no return, but then maybe there is a miracle yet for America. I wish we weren't in this huge debt position, that is very scary.
Yea...but isn't the idea to pass a bailout or investment plan to buy more time to fix the underlying problems. If we just throw money at it and do nothing, then it will just become an issue again once the money is gone. Responsible lending and regulation are going to be key...versus irresponsible lending and deregulation (look where that got us).
