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steve2470 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 07:55 PM
Original message
Upcoming depression/financial crisis: Economists' opinions ?
There seems to be a developing consensus that the USA is headed for a severe recession/depression/financial crisis if the current financial and economic trends continue. Does anyone have a feel of what the professional economic community is saying ? I know we can leave out Greenspan and the Heritage people, but I mean all the others. Thanks for your time, this topic worries me.
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demgrrrll Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 08:00 PM
Response to Original message
1. Me too. I wish I knew what to do to protect my assets. I am out of the
stock market completely. It is not as though I have enormous assets to protect but I need everything that I have for my retirement as I will not have a pension.
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applegrove Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 08:09 PM
Response to Reply #1
2. I read somewhere that low levels of growth/depression may be the norm
Edited on Tue Feb-22-05 08:10 PM by applegrove
Try not to accumulate too much debt? IMHO as in the opposite of what they recommend during hyperinflation (which is to buy real-estate).
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slor Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 08:14 PM
Response to Reply #2
5. If it becomes a struggle to even get food...
who is going to be worried about debt? I really want to know, and this is not meant to be rude. My big concerns will be my wife and myself, and having food and shelter.
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applegrove Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 08:17 PM
Response to Reply #5
6. See the deflation will be low level & prices will go down too - for food
as well as for clothing. Because it will all be imported. And the deflation will not be like the dirty thirties... it will only be at a low level like 2% at the most. Wages will be stickier than prices at the store.

Much of the growth will be in China, India, Russian & Brazil as their middle classes explode.
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deek Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 08:18 PM
Response to Reply #1
7. start the IRA or mattress?
I have no retirement. Would it be prudent to start now or just save cash?
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Toots Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 08:51 PM
Response to Reply #7
13. Gold not cash....... The dollar is losing value daily.
Gold always goes up in times like these. It is a stable world currency. Has value in all countries.
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many a good man Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 08:13 PM
Response to Original message
3. Things don't look good
US consumption drives the world's export markets. Consumer and government debt is up to our eyeballs. There are no more tricks (fiscal stimulants) left in **'s magic hat.

Our trading partners will have to make a collectve decision on how long to prop up the status quo, which is American dominance. They are already making plans to reduce their dependence on us. It will be painful, so they won't do it unless there's no other choice for them. If this happens, America will have to start over again, this time on a more level playing field.

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steve2470 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 08:13 PM
Response to Original message
4. comments on this English article please
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/...

Don't believe all the talk of catastrophe
By Simon English in NEW YORK

A casual reader of the business pages might have reached the understandable conclusion that America is on the brink of a catastrophe. Nearly all of the financial news from the US in the past three years has been bad.

There was a series of spectacular bankruptcies starting with Enron, accounting fraud seemingly everywhere and a stock market that has struggled to stay even. Lately, the talk is of a failing dollar and budget deficits that simply cannot be sustained.

Yet economists on Wall Street and elsewhere are almost universally optimistic about the near future.

<snip>

Comments about this article please ?
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SpiralHawk Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 08:25 PM
Response to Reply #4
9. Administration Experts Agree: Everything is just fine.
For the Republican rich.


"Reality is that which, when you no longer believe in it, still exists." -Phillip K. Dick
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ClarkUSA Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 08:50 PM
Response to Reply #4
12. UK Telegraph is a rightwing rag
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Toots Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 08:53 PM
Response to Reply #4
14. And Hoover said "Prosperity is just around the corner"
:shrug:
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serryjw Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 09:08 PM
Response to Reply #4
15. All I know.....
Is my millionarire friends(dems) have their money in Euros.if that means anything...I have no money, so I plan on working until I drop.
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tsuki Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 09:34 PM
Response to Reply #4
17. I have grown to believe that the optimism is related to the cash
infusion to the stock market of the social security money. Trillions to boost the market. I have no evidence, no documentation, just the belief that if a man were starving by the side of the road, there is not a Bush born that would throw him a crust. Now, why is Bush "worried" about American's social security payments?
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Guaranteed Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 08:20 PM
Response to Original message
8. We have a depression every 80 years. We're due in the next
few.
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steve2470 Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 08:46 PM
Response to Original message
10. Moderators: maybe we should lock this thread and go here:
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doodadem Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 08:49 PM
Response to Original message
11. Holy Crap Batman!
I've been reading a number of things lately from PhD level economists that say we are teetering on the brink of HUGE economic crisis in this country. Here's just one that scares the crap out of me, copied below.
I am very glad I have a farm (that we can hopefully hang onto in crisis) where we can raise our own vegetables, and if necessary, chickens/eggs. I refuse to eat my pet steer or my goat though!

The China Syndrome
Friday 28 January 2005 @ 11:34
The fragility of the American economy is not found in esoteric indicators like consumer spending, though that is important, but in the kindness of our so-called enemies.

Take China, for example, the big Red menace looming beyond the California tide. Most see China as our next big economic and military competitor, some sort of Soviet Union Mark II just waiting to explode onto the scene.

Yet few people really understand that China, right now, has the power to cripple this country without firing a shot. Why? Because they buy our debt. No, strike that. Because they buy our staggering debt, and if they decide to stop doing that, our economy will be mortally wounded.

Robert Kuttner explains it in his recent article from the American Prospect:

Countries go broke gradually, by borrowing so much money that creditors lose confidence in their ability to pay the debt back. Then, they go broke suddenly as creditors stop lending.

This has happened to more than a dozen third-world nations, who had the additional misfortune of having to borrow in dollars. As their own currency lost the confidence of world markets, they lost value against the dollar. This only increased their real debt burden. The optimists say, ''It can't happen here."

First, we're the people who print dollars. So if the dollar is losing value, it just means the money that we owe the rest of the world is getting cheaper. Lucky us.

Second, we enjoy a codependency with our creditors. For instance, China, which keeps lending us money to finance our deficits, may be accumulating dollar credits that are losing their real worth. But China needs us to keep absorbing their products, so China will go right on lending.

Kuttner goes on to explain the nightmare scenario:

Yesterday, the bipartisan Congressional Budget Office (CBO), possibly the last intellectually honest government agency in George W. Bush's Washington, reported that our fiscal situation is even worse than expected.

According to the CBO's latest ''Budget and Economic Outlook," the projected deficit for 2005 will be about $400 billion. The CBO declares, politely but unmistakably, that it doesn't buy the Bush administration's budgetary gimmickry of trying to keep anticipated military outlays out of the official budget.

''The absence of further appropriations for activities in Iraq and Afghanistan," CBO states, ''masks a further deterioration in budget projections over the ten years."

Specifically, the deficit for the next decade is $504 billion worse than anticipated in CBO's previous estimate last September.

Finally, from Kuttner, comes the fear:

As for the Chinese, Clyde Prestowitz of the Economic Strategy Institute, formerly a senior trade negotiator in the Reagan administration, offers the following scenario: In a future crisis involving the tense China-Taiwan relationship, the Chinese ambassador suggests to Secretary of State Condoleezza Rice that maybe the United States would like to move its warships 500 miles away from Taiwan. Rice demurs. The next day, the Bank of China sells a few -- just a very few to get our attention -- U.S. Treasury securities. Money markets reel.

Would the Chinese play such a risky game? They have their own interests, geopolitical as well as economic. They are certainly not an American pawn, less so with every passing year. Miscalculations have happened in world economic relations before, and with calamitous results.

Would the Chinese play such a risky game? Take a close look at this article from Wednesday's Associated Press wire:

China has lost faith in the stability of the U.S. dollar and its first priority is to broaden the exchange rate for its currency from the dollar to a more flexible basket of currencies, a top Chinese economist said Wednesday at the World Economic Forum.

At a standing-room only session focusing on the world's fastest-growing economy, Fan Gang, director of the National Economic Research Institute at the China Reform Foundation, said the issue for China isn't whether to devalue the yuan but "to limit it from the U.S. dollar."

"The U.S. dollar is no longer in our opinion is no longer (seen) as a stable currency, and is devaluating all the time, and that's putting troubles all the time," Fan said, speaking in English. "So the real issue is how to change the regime from a U.S. dollar pegging ... to a more manageable...reference...say Euros, yen, dollars those kind of more diversified systems," he said.

Journalist Seymour Hersh buttressed this assessment in a recent interview with Democracy Now:

"Another salvation may be the economy. It's going to go very bad, folks. You know, if you have not sold your stocks and bought property in Italy, you better do it quick. And the third thing is Europe -- Europe is not going to tolerate us much longer. The rage there is enormous. I'm talking about our old-fashioned allies. We could see something there, collective action against us. Certainly, nobody -- it's going to be an awful lot of dancing on our graves as the dollar goes bad and everybody stops buying our bonds, our credit -- our -- we're spending $2 billion a day to float the debt, and one of these days, the Japanese and the Russians, everybody is going to start buying oil in Euros instead of dollars. We're going to see enormous panic here. But he could get through that. That will be another year, and the damage hes going to do between then and now is enormous. Were going to have some very bad months ahead."

Anyone who buys into the Bush administration idea that this nation can go it alone without the rest of the world needs a few refresher courses in Economics 101. The minute the rest of the world gets tired of our belligerence, they can turn us off economically as easily as flicking a light switch.
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AlCzervik Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Feb-22-05 09:13 PM
Response to Original message
16. I worry about 1st time homebuyers getting mortgaged for way more then
they should. Mortgage companies are now even financing down payments. The rule used to be your mortage amount could be up to 3 times your anual salary, thats gone right out the window today. I expect forclosures will be on the rise in the next 5 years, they have gone up already but will get even worse.
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kazoo35 Donating Member (46 posts) Send PM | Profile | Ignore Tue Feb-22-05 10:05 PM
Response to Original message
18. As a former broker...
I got out of the business because I know what's coming in our economy. I got out, and I'm out of the stock market entirely. I'm almost totally out of the bond market. I have a few other things, but nothing substantial.

If you have your money in the stock market, you're done for. If you have it in the bond market, you're probably still done for.

If you can exchange your US dollars for Euros or Canadian dollars you're better off. These two moves should prove useful for a couple years. After that, we're headed for a global depression that will cripple things like food production and local transportation.

Middle class in India exploding. Hah.

I advise you all to learn how to play chess for your entertainment, get physically fit and remain that way, do away with your desire for material posessions, and prepare to move on a moment's notice.

If you live in Las Vegas or Phoenix, go somewhere else. If you heat your home 24/7 in the winter, move. If you don't know where the water comes from that comes out of your tap, move.

You're better off having a skill than a job, better off living with less than being optomistic, better off doing than having. Unless you're rich, in which case I'm pretty sure you'll be able to take care of yourselves.

I'd suggest learning to enjoy reading the classics and improving yourselves in that fashion. If you enjoy debating the love life of J-Lo or P-Diddy, remember how totally absurd that was ten years from now when you look back on it.

If you are over 70, you might not notice what's coming up unless you travel a lot. If you're over 60, your retirement will not be anywhere near as comfortable as you thought it might be. If you're over 50, the golden years of your life will be made of lead. From 40 to 20, your lives will be something like the lives of the people who lived and worked and struggled during the Great Depression. The younger ones, well, I wish you saw how great a civilization could be and experience it to the fullest. Maybe it's better that you never knew, you won't miss it as much.
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