A Sea Of Red

I have heard on television, from some politicians, in print, on the internet, etc. that our economy is in trouble. The problem is that everywhere I go (even up here in the wrecked Michigan economy), the stores are jam packed. I hear of record online sales, and now this: http://biz.yahoo.com/ap/071129/economy.html?.v=35

The economy barreled ahead in the summer, growing at a 4.9 percent pace. The performance was the strongest in four years

of course they followed it up with :

but isn't expected to last through the current quarter amid the housing slump and credit crunch.

I know we have some strikes against our economy in the lending industries, but are things really bad? People seem to be spending as much or more right now as I can remember in my lifetime. It seems like we have heard doom and gloom for the past few years, but I really don't see anything bad (outside of an up and down stock market....although it is still at a high)

I guess we're not in the Great Depression, so it could be worse.

whmatthews wrote:I guess we're not in the Great Depression, so it could be worse.

I'm just wondering which years have been better? We won't know the total for a few months now, but here are some other things I have read:

http://www.businesswire.com/portal/site ... ewsLang=en

NEW YORK--(BUSINESS WIRE)--Retail Decisions (ReD) reports that the online retail market received a double dose of good news as merchants kicked-off the 2007 Holiday season. Purchase value of goods sold on Black Friday was up 83% and on Cyber Monday was up 80% year on year.

ReD further compared U.S. online shopping activity over the entire holiday weekend between November 23, Black Friday and November 26, Cyber Monday with the previous year. Black Friday’s purchase value of goods sold and transaction volume lagged slightly behind Cyber Monday, but overall transaction volume for Black Friday was up 62.25% and Cyber Monday up 54.25%, like for like over 2006.

http://media.www.sdsucollegian.com/medi ... 0092.shtml

According to the National Retail Federation's Web site, 147 million shoppers-a 4.8 percent increase from last year-swarmed stores nationwide during the holiday weekend.

Why are things reported as being so bad or am I just paying too much attention to the negative?

because any indication that good things have happened during the current president's admin would give the loyal opposition less to b & Moan about.

belcherboy wrote:People seem to be spending as much or more right now as I can remember in my lifetime.

I'm no economist, but I think there's a lot more to it than just spending. A lot of it has to do with how consumers are spending (going into deep debt). That combined with the mortgage crisis is bad news. If the mortgage industry continues to crap out, eventually people will start to default on their credit cards as well as their mortgages. All of this irresponsible lending (and spending) is catching up to us. I don't think we're talking about a complete collapse, but there's a definite downturn right now. It doesn't help that our government is spending just irresponsibly as we are. (See this story: http://tinyurl.com/3d2rwk)

The weak dollar is another point to consider right now. The Euro and Canadian dollar are leaving the U.S. dollar in the dust, and that ain't good. Other nations and overseas investors are dumping the U.S. dollar as their standard currency. (See this chart: http://tinyurl.com/2zz6zr)

Also, the Comptroller General of the U.S. recently had a few things to say about this:

There are positive economic signs recently, but the overall picture is gloomy. That's not new, but it certainly seems to be getting worse.

Belcher, it's nowhere near as bad as the press is making it out to be. The last quarter far exceeded the expectations for economic growth (4.9% versus 3.9%, strongest in 4 years).

Okay, guys, they are very grim about the 3Q (1.5%). Place your bets now, because I can almost guarantee you the economy will beat their estimates, again.

http://biz.yahoo.com/ap/071129/economy.html?.v=35

The real concern of the common person should be inflation from continued rate cuts from Bernanke. I have few hundred rupees for luck in my wallet that are now worth a lot more than they were just a month or two ago. Everyone talks about recession like it's the plaque, but it can be good for the long term health of the economy. With credit spending out of control, it would be nice to see people actually being responsible and a recession as a result. I'd rather have a recession than see the dollar fall out of significance.

Realist wrote:With credit spending out of control, it would be nice to see people actually being responsible and a recession as a result.

I agree, but with Bush announcing this morning that he's going to interfere and help banks limit the rise of sub-prime mortgage rates, it doesn't look like it will be as bad as I had hoped. It sucks that people would lose their homes, but when you make bad financial decisions you should have to pay the price. I don't like the government getting involved at all.

El Scorcho wrote:

Realist wrote:With credit spending out of control, it would be nice to see people actually being responsible and a recession as a result.

I agree, but with Bush announcing this morning that he's going to interfere and help banks limit the rise of sub-prime mortgage rates, it doesn't look like it will be as bad as I had hoped. It sucks that people would lose their homes, but when you make bad financial decisions you should have to pay the price. I don't like the government getting involved at all.

my wife and I agree with both of you



nothing more annoying than scrimping and saving/living within our means, while the papa whiskey tangos around me blow every SSI check on lottery tickets and Jack Daniels, but have a 4000 sq ft house and a H2 in the driveway.

El Scorcho wrote:it doesn't look like it will be as bad as I had hoped.

Did you really mean to say that?

ALUmnus wrote:

El Scorcho wrote:it doesn't look like it will be as bad as I had hoped.

Did you really mean to say that?

Yes, but I'm afraid you've taken it out of context by just quoting that part. See PAmedic's reply. He gets it.

PAmedic wrote:

El Scorcho wrote:

Realist wrote:With credit spending out of control, it would be nice to see people actually being responsible and a recession as a result.

I agree, but with Bush announcing this morning that he's going to interfere and help banks limit the rise of sub-prime mortgage rates, it doesn't look like it will be as bad as I had hoped. It sucks that people would lose their homes, but when you make bad financial decisions you should have to pay the price. I don't like the government getting involved at all.

my wife and I agree with both of you



nothing more annoying than scrimping and saving/living within our means, while the papa whiskey tangos around me blow every SSI check on lottery tickets and Jack Daniels, but have a 4000 sq ft house and a H2 in the driveway.

IE: if it aint bad enough = no consequences for their actions (stupidity) and I pay for it (their lifestyle/dependance on public $$$)

Sorry, when I saw "it" I thought you were referring to the economy. That's why I asked, just a little clarification.

PAmedic wrote:

El Scorcho wrote:

Realist wrote:With credit spending out of control, it would be nice to see people actually being responsible and a recession as a result.

I agree, but with Bush announcing this morning that he's going to interfere and help banks limit the rise of sub-prime mortgage rates, it doesn't look like it will be as bad as I had hoped. It sucks that people would lose their homes, but when you make bad financial decisions you should have to pay the price. I don't like the government getting involved at all.

my wife and I agree with both of you



nothing more annoying than scrimping and saving/living within our means, while the papa whiskey tangos around me blow every SSI check on lottery tickets and Jack Daniels, but have a 4000 sq ft house and a H2 in the driveway.

There's a word for this: Hater. Aside from the possible government bailout of mortgages which would affect your tax dollars, the rest of the high life is on personal credit. If you think it's irresponsible, then good for you for not doing it.

wrong.

constant defaulting on personal credit forces the major lenders and revolving credit companies tighten their belts- and pass the costs along to people like ME who have been very responsible.

I have NEVER defaulted or so much as missed a payment, but my fixed rates on 2 of 3 cards were suddenly "converted" to variable rates, and many benefits were removed or scaled back.

thats the result of the above mentioned papa whiskey tangos' "personal credit" being abused, and affecting yours and mine.

And yes, at times I've been called a hater.

National debt grows $1 million a minute

By TOM RAUM, Associated Press Writer
2 hours, 5 minutes ago

WASHINGTON - Like a ticking time bomb, the national debt is an explosion waiting to happen. It's expanding by about $1.4 billion a day — or nearly $1 million a minute.

What's that mean to you?

It means almost $30,000 in debt for each man, woman, child and infant in the United States.

Even if you've escaped the recent housing and credit crunches and are coping with rising fuel prices, you may still be headed for economic misery, along with the rest of the country. That's because the government is fast straining resources needed to meet interest payments on the national debt, which stands at a mind-numbing $9.13 trillion.

And like homeowners who took out adjustable-rate mortgages, the government faces the prospect of seeing this debt — now at relatively low interest rates — rolling over to higher rates, multiplying the financial pain.

So long as somebody is willing to keep loaning the U.S. government money, the debt is largely out of sight, out of mind.

But the interest payments keep compounding, and could in time squeeze out most other government spending — leading to sharply higher taxes or a cut in basic services like Social Security and other government benefit programs. Or all of the above.

Source: http://news.yahoo.com/s/ap/20071203/ap_ ... _in_debt_4

Americans from Main Street to Pennsylvania Avenue seem to have a hard time grasping debt, it seems.

Well...I listen to Colin Cowherd once in a blue moon but one day I was listening and he was ripping people who think our economy is suffering...


He said his IRA's, stocks and other investments are doing better than they have in SEVERAL years...unemployment rate is at a all time low and he rattled off a few more examples...I dont think he's a republican although I could tell he was happier as far as his personal finance is concerned with Bush rather than Clinton

As I said before, I think there are some positive signs for the short term. However, the overall picture is horrible. It's just been that way for so long that people seem to be ignoring it now that it's coming to a head.

Ok, here's my solution to resolving the national debt and government spending:
1. Constitutional amendment to give the president line-item veto
Why: Governors in just about every state have to deal with a clause in their state constitutions requiring a balanced budget. Therefore, they are able to remove certain parts of bills without vetoing the whole thing. Congress gave Clinton the power of Line Item Veto in the 90s, which helped him (along with higher taxes) balance the budget. The Supreme Court declared the power unconstitutional. So now, in order to get anything done, Bush must approve bills entirely, which can include federal funding for "horseback therapy" or a number of other ridiculous items.

That alone could help things tremendously. Also, the Fed is likely to cut interest rates again. This is bad...it loosens the money supply, further weakening the dollar. Plus, when my CDs renew it means they'll renew at a lower interest rate. Lowering the interest rate is not the answer.

horrible? I think you're exagerating a bit much. The real estate/mortgage markets are correcting themselves after years of ridiculous growth so that's just capitalism at work. I know you seem to focus a lot on the national debt, I'm not to thrilled with it either, but it's pretty normal of an industrialized nation.

LUconn wrote:I know you seem to focus a lot on the national debt, I'm not to thrilled with it either, but it's pretty normal of an industrialized nation.

It is (perhaps) normal for an industrialized nation, but the way we approach our debt is not normal. We keep spending faster with seemingly little regard for what impact it's having. As the article I posted just this morning talks about, we're starting to struggle with the interest payments on the national debt. It is not a good situation. If you don't like horrible, pick another adjective, but things are not hunky dory.

This guy pretty much sums up how I feel about the current mortgage situation (and the government bailout that Bush is pushing):

http://www.kansascurmudgeon.com/?p=118

Here is today's article on the mortgage issue:

WASHINGTON (AP) -- The Bush administration has come up with a plan to help strapped homeowners facing a daunting jump in their monthly mortgage payments. The proposal, reached in negotiations led by Treasury Secretary Henry Paulson with the mortgage industry, would freeze introductory "teaser" rates on subprime mortgages, preventing them from resetting to higher rates for five years.

President Bush, who was scheduled to announce the agreement after a meeting with industry leaders at the White House on Thursday, has stressed that the deal is not a bailout because no government money is involved.

The effort is aimed at stemming a threatened wave of foreclosures in coming years as 2 million subprime mortgages, loans provided to borrowers with spotty credit histories, reset from their introductory rates of around 7 percent to 8 percent to levels as high as 11 percent, adding hundreds of dollars to the typical monthly payment.

http://hosted.ap.org/dynamic/stories/M/ ... SECTION=US

Here is my issue...what did these people think would happen when they got these extra low ARM's? There is a reason these folks are "borrowers with spotty credit histories." Again, the government is interfering because some people take no personal responsibility for their own actions.

Fumblerooskies wrote:Here is my issue...what did these people think would happen when they got these extra low ARM's?

You know what they thought? Absolutely nothing. They didn't think. They just saw a nice house and a banker saying "Just sign here!". The banks who offered these loans and the people who signed for them should have to face up to what they've done. This government bailout business really upsets me.

agreed- but you guys are gonna agitate LUconn again, and that's just not nice.