My wife has a theory that this whole recession thing is an emotional reaction to irresponsible press. She says a few happy good news economic stories and everything should be fine. With the cash on the sidelines I don’t doubt it really. What can be a better story than $50 a barrel oil and $2 gas?
Press says recession, credit freeze, banks in trouble and everyone stops spending, hordes their cash and pretty soon, self-fulfilling prophesy happens.<!—-><!—-> <!—->
Two-part question, how are you all doing? (I’ve been afraid to drop in the last few months to be honest).<!—-><!—->
Second part, how long do you think till this whole economy thing gets back to normal?<!—-><!—->
Wishing all of you my best, sorry I haven’t been around much lately.
L
GardenStructure.com~Build for the Art of it! Decks Blog
Replies
Lawrence.
Uncertainty fills the air. I'm in the heart of the the auto industry and uncertainty REALLY fills the air. If the auto plants shut down, the ancillary industries that are all over this area..........
This in turn affects the rest of us because these others move a large chunk of change around here.
And this after a pretty darn good yr for me in spite of the auto plant closings, layoffs and buyouts.
I'm going to be on about a 6 wk shutdown myself starting tomorrow-wondering what the new yr will bring.
So...........
A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
We are taking advantage of the slowdown and reinvesting money in our home. I feel a lot better giving money to the local trades than to lose it in a crashing stock market or watching it languish at a percent or so in the bank.
If I am going to be broke anyway I might as well have a nice house to live in.
I went through the slowdown in the '60s, where as a young man, I had problems getting a job - I also had no skills.
In the '80s I was in South Africa, where the prevailing media idea was <voice of Goofy> Yup, we;re going to have a recession. America's there. It'll hit here too. Yup. Yup. Yup. Sure enough.
Public sentiment is formulated by the news reporters and editorial pages.
Simplistically, your wife is right. The problem is, into that mix is the fact that many people can't afford their homes (how did they get into them in the first place?), can't buy new cars (the American banking system is awash in cash, but the banks won't release it) and often can't afford the gas to power them.
I like good news stories. They make the world better.Quality repairs for your home.
AaronR ConstructionVancouver, Canada
Dang, I've been saving for 15 years for my son's college expenses - he's 18 1/2 and as long as he's at the local community college, and living at home, I can handle his tuition and books out-of-pocket.
But in a year and a half, he plans to transfer to a private 4 year college in North Georgia, a rather expensive institution. They have a work-study program; I milked cows at the school dairy to work my way through the same school. The times have changed, however. It'll take big $$$.
So yesterday I opened my Fidelity statement, and his Small Cap Stock Fund is down to 50% of what it was at one year ago. Bad timing for me. Maybe it'll creep up by the time I need it.
My own SEP plan is down about 35% from a year ago, and it's with a firm of Professional Money Managers, not a brokerage firm.
The way I look at it, it's all relative; we've all lost a relatively equal amount, so in the financial hierarchy, we're still right where we were !
Greg
The way I look at it, it's all relative; we've all lost a relatively equal amount, so in the financial hierarchy, we're still right where we were
Except that the price of gas, and food, and clothing has not dropped."Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
I had one BIG long term renovation going, until I heard about two weeks ago, the cash is getting too scarce to continue after Turkey Day..Hmmm, not good for MY winters plans.
I have a second renovation going on, that was back burner to the bigger one, Ok by them, better for me. They just informed me they got a letter from Soc.Sec. saying they were overpaid, and SS wants a bundle of $$$ BACK, which kinda has them in a bind over and above the market drops..I'll have SOME work, but my "B" plan was to get them on the front burner and start a fresh phase, and bring in two other guys..Nope, not gonna happen.
So, it sucks..I hadn't lined up or even looked for anything, being as I was fat and happy with these two..so I'm scrambleing, and may have to actually get a JOB.. The first prospect I have is hanging with a buddy on a Tree Trimming/Removal Biz. I hate climbing, but I could be a ground cutter and feed the chipper, and keep teh saws running.
Oh..I just goyt a call, local music shop, may need my guitar and stringed instrument repair talents..how coincidental..as I typed this, the phone rang..cool, inside work!
Spheramid Enterprises Architectural Woodworks
Repairs, Remodeling, Restorations
They kill Prophets, for Profits.
Duane, kreskin here.
Everytime, and there hasn't been too many-thank goodness-I've been at the end of possible jobs, the phone rings.
Hopefully it starts ringing the day after Christmas.A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
Thanks Kreskin,
If it works out with SS, job #2 SHOULD be a go ahead, it is a nice change from the masion de luntic, that one was gettin old, I'd been there a yr. and half..
It would have been more shop time ( home) and that is good, but #2 has afair amount of that as well, besides a lot of interior under window raised panel wainscot type, repairs.
The big kicker is #2 is falling down, a rotted 2nd floor support/header in a balloon frame, between upper and lower windows..joist sagging window head bowed down..and all that will be done from out side, to save the L&P inside as best as I can. Nasty old 1840 lap siding with an inch of old paint, kinda hard to replicate that look..LOL
I don't know what your "Procedure" entails, but I wish ya fast healing, no matter what.Spheramid Enterprises Architectural Woodworks
Repairs, Remodeling, Restorations
They kill Prophets, for Profits.
Carotid artery deblockage. Smitty tells me it'll lower my handicap on the golf course. I'm thinking if I slip the surgeon a twenty, they'll do something to keep my head down. That should lower it a #### load. The down side-supposedly a two wk no work after each side. That's a lotta nothin' coming in. The hanging out in a warm house reading and putzing with photo's I can live with. Sure as hell would hate to see a slowdown after that.
Thanks for the encouragement. Wishing you an overworked holidays!A Great Place for Information, Comraderie, and a Sucker Punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
It must be all that #### headed up to the brain..LOL
You gonna have a cool Frankenstien scar? Have em add a few hex head bolts stcking out, never need a costume again.
Seriously, good luck with that.
Suckks getting cut, but the other alternative is worse I guess.Spheramid Enterprises Architectural Woodworks
Repairs, Remodeling, Restorations
They kill Prophets, for Profits.
Like you I think a lot of this is due to bad press. With Brian Willams asking nightly questions like "Will there be a run on the banks?" what would one expect?
As far as your question relating to "getting back to normal". That all depends of what you mean by "normal". A lot of people in the building industry have been in it a relatively short time and view 2005 as "normal".
Frankly I don't think this downturn is as bad as the one in 1981. Then a "great" home mortgage interest rate was 15%. Typical was 18%. ALL building in my area just stopped. It was zero. Not so yet this time. Interest rates are hovering in the 6% range.
Right now I'm booked up through February as an architect doing all residential and, having just built a third house for myself, have one client talking to me about building his house. Besides the license issue, I'll probably be too busy architecting. I'd rather do one thing great then a bunch of things mediocre.
Runnerguy
I remember the first "gas crisis", in the early 70s when gas went from 20 or 30 cents per gallon to a $1.25 or $1.30, and there were lines around the block to get it, and even/odd days to buy it.
During the monolog Johnny Carson, made a comment, that some Senator had said there was going to be a shortage of the toilet paper the GSA bought for government installations.
By noon the next day the shelves of every store in town were bare of toilet paper. A couple of million housewives ran out and bought a years supply, (my Mom included), that they didn't have room to store.
I used to farm in the 70's. I asked my fuel dealer about availability of gas. He had full tanks and told me the gas crisis is phony, this way the oil companies can jack up prices. They never went down, only up.
mike
I live in an area with an agricultural based economy. The last two years have been pretty good but prior to that we had several years of severe drought.
This area has had a declining population for years. The last new house in this town that wasn't pulled in on wheels was built in 1979. There is no housing bubble here because housing is dirt cheap.
So-for the past couple of weeks I have been baffled as to why practically everyone I talked to asked if I've had work. Yesterday, I figured it out. "I was wondering if you had work with this recession being so bad."
My area has been in a recession for years, but because of the constant bombardment of the word recession by the press, all of the sudden it's hard times. lol
The amount of work I have never changes much. I don't have to work for everyone, just a few.
I've sat down and looked at the next year on paper. How I manage things under my control will have a larger impact on my earnings than what happens in the national economy, unless there is a total meltdown of the financial system.
I think your wife has a bad case of wishful thinking. The fundamentals of the American economy look to be seriously out of whack. Enormous national debt and budget deficit, negative trade balance, real estate bubble burst and rightly so. Fuel costs are down but I don't expect them to stay down, I think they'll be climbing again as soon as economic activity picks up. In addition, other countries are moving in on our territory as #1 superpower. If you think that we're going thru a brief adjustment, well... good luck with that. We're still the world's #1 economy but we borrow way too much money both personally and as a country, we're losing our grip on good productive jobs, and we're facing huge challenges in terms of resources like energy.
We'll be back to "normal" after a while but it will be a new normal, not the old one where everybody has a 3500SF house with a boat and two SUVs in the driveway, even though total household income is maybe $75,000.
Good news for builders is that people still need places to live, buildings still need maintaining, etc. Figuring out where you fit into the changing picture is the trick.
Good news for everyone is that the incoming administration appears to be poised to take a good run at the situation. I am personally quite disappointed that the Dems seem to want to "bail out" the automakers, but possibly cooler heads will prevail.
Calvin- is like the closer folks are to an automotive plant the more bleak it seems. Fast healing buddy!
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Aaron, seems that with age and experience the easier it is to weather these storms.
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Greg—it does seem like a sliding scale and we all move up and down with the wealth… except the guys that were connected who yanked their money out and are waiting for the bottom to pounce… (Mad Money Fans).
<!----><!---->
Eddie—gas has dropped, unless you are in Canada, then it is still a ridiculous $450 a gallon.
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Sphere, see, that’s why I admire you breaktime cats, you always land on your feet… what was I worried about?
<!----><!---->
Runnerguy, 81 was bad… 18.5 interest rates were no fun. 92 was bad up in Canada… free trade moved all the factories out and caused a nasty recession in Ontario. I can remember seeing guys framing houses and supplying the fasteners for 1.60 a sq’ in Barrie.
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Craig—hope it stays steady for you.
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David M, don’t know how I feel about automakers and bailouts…they are in this situation for a reason, if the business were viable they wouldn’t be there. Some major changes have to happen to make it feasible.
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Here’s to hoping the downturn will be brief and that your incoming administration is as adept as we all believe.
<!----><!---->LGardenStructure.com~Build for the Art of it! Decks Blog
"this whole recession thing is an emotional reaction to irresponsible press. . . . a few happy good news economic stories and everything should be fine. "
Good grief. I literally can't formulate words to respond to that.
"Good grief. I literally can't formulate words to respond to that."
'Ditto'
Jeff
"Good grief. I literally can't formulate words to respond to that."
Please do. Give it some effort and postulate an opinion. I believe she has a point, it's not the cause, greed did that.
But if you truly believe that selling woodwork, or homes or renovations or decks and fences has nothing to do with general emotion of a society, and that discretionary businesses like ours aren't adversely affected by the media's schitzophrenic obsession with economic fear...
Please... continue, tell us why fear of a recession does not lead to a self fulfilling prophecy.
L
GardenStructure.com~Build for the Art of it! Decks Blog
businesses that survived the great drepression are not making it through current times. so, i dont think its the media. americans are more leveraged than we have ever been (this is scary). the way i see it is much of the business activity over the years was artificial. so business wont be how it was anytime soon. the housing markets wont (supposedly) bottom out until may of 2011. long way to go...
I agree completely. It was all fake.
Credit was so easy to obtain, regardless of your financial status, so alot of people overextended themselves. Well, now the credit is coming due and noone has the cash to pay up.
Those that made solid financial decisions will be ok. Unfortunately, those that made poor financial decisions affect all of us negatively.
This is just one of a hundred reasons why we are where we are.
I hope the govnt doesnt bail anyone else out. It was wrong to bail out wall street and I hope thats the last mistake we make. We as individuals need to take responsibility and make our own changes. Times will be tough but as a poster above quoted "this to shall pass."
A positive attitude is a must.
Leveraged isn't the half of it:
View Image
And observe that the above is "total credit market" debt, not the "national debt" (which is nowhere near as bad, though bad enough).
The only function of economic forecasting is to make astrology look respectable. --John Kenneth Galbraith
This too shall pass.
However...
The $ amount of subprime loans = approx. 2 trillion. Of which, approx 25% are foreclosing or seriously delinquent, a big problem, but not as big as it seems.
The other shoe: $ amount of Credit Default Swaps (side bets on loans, which incidentally require no stake in the original loans) = approx $60 trillion.
While we have been in similar bubble busts as the current real estate one before, the extent to which financial entities have been allowed to gamble with borrowed money on the bubble is extreme, to say the least.
Everyone talks about this mess as the subprime mortgage problem, or the housing problem.
That'd be like losing a bet on who'd win the best actor academy award and describing it as "losing money in film business".
k
Bingo KFC,
Credit Default Swaps, the thing that brought AIG down... the folks by the way that I had disability insurance with and they denied the claim when I cut off a thumb...
They were offering insurance, side bets, wagers on loans.
Akin to taking out an insurance policy for 3x the value of your neighbour's home, Burn it to the ground to collect the insurance...
So, who pays for this legalized gambling we call a stock market?
It seems the fed is covering AIG's bad bets... rather than letting them get their legs broken like a contractor that has bad gambling debts.
When exactly did the stock market become a casino? Why is that ok? I thought it was a method for companies to raise capital to turn into a great company... to fund ventures and growth.
Sorry for the rant.
LGardenStructure.com~Build for the Art of it! Decks Blog
Exactly. "Insurance" on assets you don't have to own. Side bets. Gambling.
In the early twentieth century, there were gambling parlors known as "bucket shops" where you could bet on whether a given stock would go up or down, without owning the stock itself. The leverage and influence of these speculations on the actual price of the equities caused some problems, to put it mildly...
Bucket shops were re-legalized as "credit insurance" a few years ago. Ooops.
k
see: Futures Modernization Act of 2000
Edited 11/18/2008 11:18 pm ET by KFC
Certainly there are some real economic issues - emotions are not the cause of the "recent" run up in oil prices (before the more recent cooling off). But, the "boom" and "bust" cycles do seem to have some relation to the collective mood. Some people start doing well, get excited, spend money, make other people do well, they get excited, they spend money, pretty soon everyone is doing well, getting excited, and spending money.
Then, somebody starts doing poorly, gets scared, stops spending money, which makes someone else do poorly, get scared, stop spending money, etc., etc. Of course, you also have the media just amplifying everything. It seems like before every recession the media tells us there will be a recession every day for about 6 months before it really sets in. I'm not blaming the media for recessions, it's just annoying sometimes when they look for any excuse to start talking doom and gloom about the economy. If our GDP grows by only 3%, they say we're in a recession. In Europe, if their GDP grew by 3%, they'd have a continental holiday to celebrate.
The thing is though, they're not talking about the 60 trillion dollar "other shoe".
k
Hi Lawrence,
Good to hear from you!
Its actually been very good for us since about September as we got a GREAT job that will run us well into next year so I am VERY thankful!!!
However had it not been for that project, we would be hurting.
Hey Mike--glad you are doing well.
You will find at these times that some of the best and brightest will be scooped up by wealthy folks for projects due to the cost benefit.
Recessionary times are always the best times to build dream houses.<!----><!----><!---->
Materials are cheaper due to supply and demand, labor rates are comparably low and we get a chance to really strut our stuff.<!----><!---->
IN the early 90's we did that million-dollar guesthouse and tennis court fence in Barrie Ontario. At the time gold was shooting up in price and he owned a gold mine.<!----><!---->
In every economy someone is making money... (Its just not hedge funds this year), and we need to find a path to these people. It is time to network, do consistent advertising and print out a couple thousand cards and hand out 10 a day minimum.
LGardenStructure.com~Build for the Art of it! Decks Blog
The statement i was responding to was pollyanish at best, dangerous at worst. The media responds to events, it doesn't determine them. Much like the market. No doubt that bad news sells papers and advertising. But you're blaming the bearers of bad news rather than the cause, and selectively ignoring the effects as a result. Kind of like being the one house left after a tornado, and telling your homeless neighbors that their situation was caused by the air raid sirens.
Smaller businesses will ride out a bad economy better than others. Also some select institutions that have to continue regardless, i.e., education, medical, law, government.
Larger businesses involved in retail, manufacturing, construction, etc., and the numerous smaller outfits connected to them are the big losers. And that's what really powers the economy.
And, like it or not, this is where the trickle down effect really happens. If you're doing well now, more power to you. But eventually your clients are going to be affected, as will you. Perhaps a couple of school teachers or a physician have saved up enough for a renovation. But when relatives start losing factory jobs and IRA's drop to where retiring is no longer an option, they'll start having second thoughts.
In answer to your question, i don't see things turning around until next spring. The current administration won't make any bold moves. The incoming group will need time to implement, which will then take time to have an effect. The economy, much like an aircraft carrier, doesn't turn on a dime.
Sht,
Her comment (the wife), was that the media was aggravating the situation and that if they put it into proper context or perspective, maybe there wouldn't be so much panic and that panic could mean the difference between a short recession and great depression 2.
I disagree that small businesses and big businesses should have any difference in how they ride out the storm. A bigger business should have a larger pool of capital to work with... Shed expenses and carry on.
Well managed and maneuverable businesses will thrive... badly run and businesses that depend on the wrong things for their prosperity will perish--as well they should.
Recession is a time for attitudes to adjust, businesses to learn and evolve and the gun to be reloaded with capital for future prosperity. What makes this situation different is that much of the capital that disappeared from the market is simply sitting on the sidelines waiting for opportunity. We do a lot of work for fund managers in Toronto... Many of them had half their money sitting on the sidelines 9 months ago.
We are doing fine, however our business was built for this kind of situation. We will help a few folks thrive and gain loyalty and prosperity through it. It was started in 87, just before the recession.
Commodities hurt during times like these. We are not offering commodity woodwork.
I had the chance to borrow 3 million from a government to move to the east coast a few years back and made the conscious decision to grow organically for a while--learn the lessons on the cheap that may have cost us the company if we went for steroid induced growth. Besides, the government sounds like the worst possible business partner.
We all make choices and those choices can often determine our thriving in business or not.
LGardenStructure.com~Build for the Art of it! Decks Blog
The media responds to events, it doesn't determine them
Do you really believe that?
Do you believe if the media only spit out positive, happy bromides, that life would be so?
Pravda did that for decades. Russian citizens became very adept at reading between the lines.
Llike that you compare our media to the soviets. I believe they were proped up by the political factions that were in charge.
Lot of difference. The media in this country believes that if it bleeds it leads. When is the last time you heard good reports about Iraq? Did you know that the state dept. has certified that Iraq meatrs or exceeds 15 out of 18 conditions?
These are examples of where the media is selective. Did you know that the GDP only went into the negative for the first time last quarter? Do you realise that the media loves to excentuate the negative?
Do you realise that the employment rate for the US is 93.5% of people that want jobs have them?
"The media responds to events, it doesn't determine them."
Not so .......... if Woodward and Bernstein hadn't investigated Watergate, there's a good chance Nixon would have finished out his term. Call it the bandwagon effect, social proof, the herding instict or what you will; the media often determines events or at the very least alters the outcome. Why do networks (usually) no longer call races before a state's polls close? Remember fads like Pet Rocks or toilet paper "shortages"? No, things are not good but fear often is a self fufulling prophecy.
" So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance" -FDR
The media has far more effect on people and events than you give it credit for.
"The inherent vice of capitalism is the uneven division of blessings while the inherent virtue of socialism is the equal division of misery" Sir Winston Churchill
Except that Woodward and Bernstein were making news, not just reporting it.
No doubts about the power of the press. No qualms about optimism either. Blind optimism, however . . . .
The tone of your post suggests that reporters made this all up.. Hopefully you don't feel that way..
Reporters report and with rare exceptions what they report must be varified before it's allowed in the air.. (fear of lawsuits)
Since 1984 America has beem assuming a massive amount of debt. Prior to that the debt to GDP ration was as low as 31% today it's at over 336% percent (as of 2006)
That level of debt prevents us from doing many things and finally it appears the chickens have come home to roost.
Just like you family when you get too deeply in debt you have to curtail your spending and as a result the economy suffers..
Me I was an early casualty of the housing crunch and now 14 months later I still don't have any good job prospects..
Man... you all think I said it..twas the wife.
You know, since I have blogs I guess I am part of the media... thus, it is mostly my fault! Just kidding.
Frenchy--sorry to hear about your tough time. Hope it gets better for you soon.
There are a hundred different factors that lead to this day; wars are expensive, consumer society, slave labour making most things that we use off shore causing a huge deficit, an automotive business that has been inept for too long. Stock market that thinks it's a casino.
Sure, we have issues to work through...
L
GardenStructure.com~Build for the Art of it! Decks Blog
There's a certain amount of truth to what she says, BUT...
When the economy is down (but not Depression-style down), if everyone were to go out and spend a little bit more generally the economy would improve. However, people (even when not affected by emotions) spend based on their perceptions of their risks and needs, and when people perceive risks (such as the risk of being laid off) they rationally spend less. An evangelistic leader might be able to whip people up emotionally to spend more, but they would not then be behaving in a rational manner.
Also, in this particular economy, the average person is in debt up to his eyebrows -- over 3x his annual income. So, with banks reining in credit card limits, and with savings rates effectively at zero, there really isn't that much extra money that people can spend (other than the money they're not spending on gas).
Finally (though unrelated to the above thesis), the current effective Fed funds rate is so low that the rate cannot be further lowered enough to free up more money and stimulate the economy.
The net result (the consensus of most economists) is that the only way to recover from the current recession reasonably rapidly is for the government to spend more money.
(If anyone has any comments on this I'll take them in the Tavern. I'm not gonna start a flame war here.)
I agree Dan--
Time to coerce the auto companies to build what we need to become successful again.
Time for make work projects. Renew infrastructure...
L
GardenStructure.com~Build for the Art of it! Decks Blog
Lawrence,
I ran over 500,00 feet of standing and running trim last year and have maybe run 100,000 feet this year in mostly light commercial construction. Residential construction is way down. Atlanta has always had from 36,000 to 46,000 housing starts and this year we had 12,500. I think it will come back strong, but we can't be giving loans to folks who can't pay them back, we have to stop social engineering home ownership and mortgage laws. Much of Atlanta's problems come because we have a large population growth and the people are not selling their homes in the Northeast, Midwest and California so they can't buy here. Rentals are still very good. Problaby late 2009 before the cheap houses are all sold. I have never seen it so bad here.
Well put and excellent first post.
It doesn't matter if you believe the media is overly negative,
or if we were more optimistic things will get better. We are in a recession
and it is important to realize our income will take a hit.
Use the info to prepare as you see fit.
Lawrence -
Nice to see you again.
I happen to agree with your wife to some extent. I think that we as a country have been brainwashed for years by the media - in all it's forms. How many times have we heard, "Well, they wouldn't/couldn't print it if it wasn't true." ? There is no doubt that there are problems, some pretty severe. But, the media's way of handling them can magnify them and amplify the effects - IMHO.
As far as how we are doing, actually pretty good. I sold two properties this year. The second one went for at least 15k less than I wanted, but I looked at what was selling here (Not much) and figured the money in the bank would be a good thing. I also was worried about the possibility of increased capital gains taxes next year. i'm thinking I'm glad I took the money.
I usually work on my own properties, rental, etc. About a month ago, I decided to spend some time working on our home - new paint job, extend the kitchen, move and update a bathroom, add a covered porch. It's going to keep me busy for a few months. Meantime, I've got most of my regular rental properties occupied and I've got an eye out for any good deals. I'm in the minority, but I carry little debt which now makes my life better, calmer for sure.
You ask when the economy is coming back... I don't think anybody knows. Best estimate that I've seen is second or third quarter of next year. I don't like this constant bailing out of one group after another. It just encourages more and more. I think this is going to drag out for a while.
On the other hand, people do need places to live, and some people will always have discretionery money. If "you" can adapt in the work that you do, that helps. I suspect that many of your clients have a few bucks tucked away and you'll keep going.
Don K.
EJG Homes Renovations - New Construction - Rentals
"My wife has a theory that this whole recession thing is an emotional reaction to irresponsible press. "
I am guessing you and your wife are republicans and or conservatives. This sounds a lot like "how come they don't print positive things that are happening in Iraq?".
Our fundamentals are so messed up. Never was so much money spent, and so little to show for it, than in the last 8 years.
We are just getting into this downturn, and we will be a very changed nation before we see the end of it.
I think it interesting how Lawrence just posted some mere thoughts about what his wife said and it has become a huge politcal discussion about his and her beliefs and poltical stance.
I mean, its just his wife's view. No offense to Lawrence as I'm sure his wife is a WONDERFUL woman but she is not the U.S. Press Secretary so I don't think you all have to worry about how she feels guiding the nation! :) Heck, they live in Canada and are not even Americans so I think we are all OK with her view. :)
But the fact remains is no matter what you think of her view, we are all still pretty much hurting in this economy...regarless of how the press paints it.
I believe that although a lot of people are reacting emotionally to the problem and fear abounds, this is not the cause at all.
It's much deeper than that and will IMO become catastrophic in the near future as our economy/monetary system that has been basically floating on thin air (remember the gold standard?) reaches the end of it's road.
It's not at all hard to see if you have eyes that we are merely experiencing the death throes of the old and are starting to feel the birth pangs of the new.
One the US (although we will continue to be a major player) will no longer own. The rest of the world knows the reasons for all this and will never allow the US to dominate the way she has the last 60 years.
Hunker down may be a smart game saver for a lot of you guys.......
I don't believe that the gold standard (or the lack thereof) has anything to do with it. The problem isn't inflation but a massive speculative bubble -- one 100 times larger than anything the economy has ever seen before, and involving 10x the number of people than anything that's occurred before. Letting the air out of the bubble will be painful.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
I think Ron Paul (the guy who ran for prez that noone listened to) advocates this scenario I read about it somewhere and it make much sense to me...........so, we'll see what happens.My Blog
By "this scenario" you mean what? (I take it you don't mean "The fine art of ####" as implied by yoor blog.)
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
What Ron Paul says........the guys a smart dude............I myself am somewhat of a dope when it comes to anything OTHER than the fine art :)...............This end of the road scenario has a bit of poetic justice woven into it that I find intriguing .. . and believable.My Blog
And, of course, while "hunkering down" is a good personal strategy, it has bad implications for the economy as a whole.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
is a good personal strategy,And this is all I'm concerned about. The little guy getting smart enough to get out of debt and prepare himself for some really lean times coming..............350 billion of the 700 gone and what's to show for it?............Pretty soon it will all be gone.....and the fat cats will be begging for more as the little guy goes on beans and bread. (Something that is already happening in my neck of the woods by the way)Why worry about GM when your being forced out of your home?Hunker time...I say.My Blog
It's not the 700 billion that's a worry, it's the tens of trillions lost in the credit bubble, some lost by banks, but much more lost by individual borrowers who are now upside-down, or by individual investors (and pension funds, etc) who have seem much of their equity evaporate.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
I understand...........but do you believe any of this could have gotten started if we had adhered to a standard (like gold) for our monetary system?..................And isn't the root cause of all this far more troublesome/serious than the symptom? I say we built our house of cards on a floating foundation above a sand base .......and prayed to the gods it would never rain..........We added excessive weight one floor after another .....then it rained.My Blog
> but do you believe any of this could have gotten started if we had adhered to a standard (like gold) for our monetary system?Well, yes and no. It could have happened whether or not the US was on the gold standard, since it didn't depend in the slightest on "printing money". But if we were still on a gold international exchange standard, there would not be enough gold in the world to pay off the Saudis and the Chinese for our purchases, so they never would have accumulated the gold to lend back to us for use in our credit markets.Except that they likely would have seen the merit of a "swap" to avoid the problem of the gold shortage, so being on an gold exchange standard would actually have encouraged the bubble.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Well.I don't know I can't put up a good argument for that because I don't understand it all that much. Guess that's why a lot of us are hunkering down in our hidey holes.My Blog
Think about it: No money needed to be printed to build the credit bubble, and the gold standard only applies to backing up printed money with gold. While the lack of a gold standard is a favorite whipping boy of the old-guard conservatives, it's really not an issue here (and isn't in most other economic scenarios).
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
With an uptick rule, no private parlour bets on equities between investment firms and insurance companies, and some reasonable mortgate laws--none of this could have ever happened.
Is the uptick rule back yet? No
Is the off track betting outlawed yet? No
Is there guidence as to who can qualify for an insured mortgage? Not sure in the US, there is in Canada, but I don't think anyone has bothered yet... they are still too busy throwing money around.
LGardenStructure.com~Build for the Art of it! Decks Blog
An uptick law might have moderated the recent market crash, but is not responsible for the more problematic credit bubble/crash. Close as I can tell the credit bubble was caused (in part) by the Alternative Mortgage Transaction Parity Act of 1982, since the bubble clearly dates from shortly after that act. However, I haven't figured out exactly why or how this occurred (and I also haven't found the Congressional voting history for that act).
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The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
There's a lot involved that none of us understand... because 95% of the people in the financial industry don't understand them.
I believe you are correct... 82 enabled most of these financial instruments to be created... other deregulation in the Bush years helped as well.
What I don't understand is that if these insurance companies offered policies, and priced them wrong by trillions... why would anyone of sound mind bail them out a single penny? Good money after bad. Liquidate and carry on with life. Life's lessons without spankings for doing bad makes for spoiled brats never learning.
Now, you need to keep in mind that GDP is an outmoded measure.
GDP = consumption + gross investment + government spending + (exports − imports)
Since we import more... and much of the wealth created by Americans never actually hits our shores... the GDP calculation is skewed slightly.
I'd love to see the comparison of every tangible asset asessed vs GDP for the depression era and today. That would offer a truer perspective.
These rose colored glasses seem to have an oily film all over them.
Hmmm
L
LGardenStructure.com~Build for the Art of it! Decks Blog
Well, if that makes your wife feel better for the time being, good deal. Unfortunately, her hypothesis is not the case. We haven't even begun to see the worst of it yet.
I'll agree with that. Unemployment will for certain reach 8% before this is over, maybe 10%.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
definitely. The economy has to do a lot with peoples emotions and fears. Thats why the stock market jitters at the drop of a pin or soars at the news of good economic news.
And as the clichŽ goes, "it's always something". Oil is at $50.00 a barrel now and gas less than $2.00 a gallon may be good economic news but will be back where it was if and when the economy reaccelerates and gets back to, "normal" health.
Ted... oil was run up by speculators and greedy arabs. It was a time where there was no opportunity to make money the old fashioned way... so bets were placed on a rising star... oil.
That is not likely to happen again once the new american market rules take hold mid next year.
Speculation on certain key economic drivers will all intensively be banned, uptick rule and other regulations will be back in place.
Do I have more faith in the American leadership than Americans?
L
GardenStructure.com~Build for the Art of it! Decks Blog
You're assuming that "peak oil" was not a significant factor. But the evidence of the past two years' oil prices strongly suggests that "peak oil" is a significant factor, and if demand again approaches that of 6 months ago, prices will again rise to levels of 6 months ago.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Dan--
Was it demand, or speculation?
Commodities get run up by speculators... shell game really. Run it up...grab your money out... stick it in the next rising star.
Soverign wealth funds were running up oil at the time because it was the only good investment at the time. It was in the arab nations best interest to run it up... more for their pockets.
They ran it up too high... economy gasped, now it costs them.
Not likely to happen to that extent again. Maybe 100$ a barrel... More likely $80--I'd wager that we don't see $150 oil for a decade or more.
LGardenStructure.com~Build for the Art of it! Decks Blog
>>I'd wager that we don't see $150 oil for a decade or more
No way I agree with that. Emerging economies are not in recession to nearly the extent that developed economies are. We could be back well over $100 within a year. Quite a few sources I've read say the same.
Speculation was only a small factor. If speculation were sufficient to run the price up that high, it would still be high, since OPEC would do the same manipulation to keep the price up. But supply is simply too inflexible relative to demand for that to work.The high price of oil had little to do with the credit meltdown.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
I suspect that you're being overly optomistic. There is a whole new segement of the economy buying cars in China and India. That's well over 2 billion cars adding to the demand. This is at a time when most experts admit that we've past our peak oil production.. Now add the remergence of Russian market and natural growth with world wide population increases, the demand will still be strong for a long time in the future.
When you add the cost of various governments bailout efforts to inflationary pressures and realize that those governments won't be paying the same constant dollars/euro's/yen etc.. for oil into the future the number can very easily more than double or triple..
Ok Frenchy--
Today's dollars then.
Now, what do you think will be the result from this crisis. Will America realize that offshoring the slave labor to produce things is not as profitable as it was?
What will you and most people like us do in the next 3 years? Buy a more efficient vehicle?
The truck I have now gets 29 mpg.
China has been killed in this crisis. No growth in south asia either... they all bank on US business, and if the US changes the rules... those countries that rely on American Outsourcing will rot.
What was it Obama promised during the election?
"to Stop Rewarding Companies that Ship Jobs Offshore"
The arab nations greed will be met with a backlash.
I've cut my trips to about 25% of what they used to be just out of principal. They will not get another dollar more than absolutely necessary. I used to drive because I love driving.
LGardenStructure.com~Build for the Art of it! Decks Blog
Not much I agree on there either. China has certainly suffered a downturn too, as has almost every country in the world, but the U.S. is not their only export market and as soon as consumption resumes they will go back to producing. They have a positive trade balance and a budget surplus. GDP growth for '09 is projected in the 8% range, while most of the developed world will be negative or near zero.
The middle east will continue to find plenty of markets for their oil. What sort of backlash are you imagining? The drop in crude is temporary and it will not last.
This discussion is not in the woodshed? Who is kidding who!
China will hurt. It won't be the same.
Opec learned that boosting the price of oil too high chokes off their supply of cash for their product. They know it should sell for less than $100. (today's dollar--inflation is coming)
Those that speculated and bought oil at 140 lost money... why would they do that again.
Pricing is set based on speculation--not actual demand... perceived demand. It's different.
LGardenStructure.com~Build for the Art of it! Decks Blog
> The truck I have now gets 29 mpg.You're in a very small minority, with a truck that's that efficient. Most vehicles in the US could be replaced with ones getting 30-50% better mileage with no significant loss of function.The "result of this crisis" is hard to say. The crisis is a "perfect storm" of several things, but the single most limiting factor is that the borrowing power of the US is tapped out. Unless we frugal types borrow just for the heck of it, there's simply no more borrowing (and hence spending) that can be done in the consumer sector. And until the consumer sector improves (we start spending again), businesses have neither the motivation nor the borrowing power to spend more on investments.This is why it's going to be necessary for the government to spend money -- it's the only segment of the economy with the ability to spend (and invest) at this point in time.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
I used to spend hundreds of dollars a month on fuel. Today it's rarely over $50 a month. Yes the last two vehiclas I bought were very fuel efficent, a Saturn which averages over 36 mpg and a Toyota which averages over 43 mpg.. Mind you I bought the Saturn in 2002 and the Toyota last year.
(I would have bought another Saturn but they are no longer made in America)
BY the way,, China sells a great deal to Europeas well as America so the slow down is a result of the world wide concern.
Yeah, we're stuck re my wife's car, a 97 Saturn. It still gets 43 highway, but it's getting a little long in the tooth and you can't find anything to replace it with the same gas mileage.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Might I suggest the Toytota? I wanted American too but I found out the Japanese name tag cars actaully have more American content than American name taged cars.. My daughter claims to get over 50MPG on the hwy with her Yaris..
I was pleasantly pleased to find out how much room it had inside plus the ease of entrance and exit compared to the Saturn Ion. Sure seems reliable too!
What do you consider long in the tooth?
My daughters Saturn has over 100 k on it and the original equipment brake pads still have more than 50% of lining left.. Thus far we've only done ruetine maintinace.
My wife's Saturn has 150K on it and she often uses it for traveling up to the Cities or to Fargo, so it needs to be reliable. It's been doing fine so far, but it's getting to be the one horse shay.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
My DW's Saturn wagon (96) just flipped 197,000. 3 valve cover gaskets, and finally a new cover ( 400.00) and now wants brakes, calipers, and rotors..another 400.00.
Will need a clutch soon too..
now THAT is what I call long in the tooth.Spheramid Enterprises Architectural Woodworks
Repairs, Remodeling, Restorations
They kill Prophets, for Profits.
The Credit crisis is bringing all economies down.
Some not as fast as ours, but all of them.
WHen it looked like the stock market was going to go south, hedge funds dumped TONS of money into oil futures. When things went south and people were affraid that generally unregulated hedge funds would go south.
The money came out of hedge funds and in turn out of oil and/or gasoline futures.
The Saudi's can't afford for consumption to slip, and can't afford for prices to be high enough to encourage drilling or exploring new sources.
Seems that The Saudi's are even worse at managing their money than we are. ANd the King field is on the downslope of it's production years.
I agree that speculation was part of the run up in oil prices. But the sudden collapse of markets and demand also play a crucial role. As the economy booms once again I'm sure we'll see prices rise at the pump. Maybe not in the near term but it's all but guaranteed as nations work to build their economies back up and create demand.
Friday I spoke to my old business partner.
10 years later? He took a job after not having the phone ring a single time in 12 weeks AND having several of the shops that could ALWAYS be counted on subcontract work to get you thru.....................closed up! Almost over night.
If market has dried up you can't hesitate... move.
You cannot do battle with the environment.
LGardenStructure.com~Build for the Art of it! Decks Blog
Move where?
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Houston, Dallas (and most of tx), Connecticuit, Many parts of California, Arizona (cities nearest LA), much of the midwest is doing ok.
in Canada, Calgary, Edmonton, BC is still doing ok.
I am likely moving 2 guys presently, one from a heavy auto based community to the Toronto area, and another from a town with less than 100k population to Toronto as well.
Bigger market... more opportunity generally.
L
GardenStructure.com~Build for the Art of it! Decks Blog
Dunno about other parts of the midwest, but foreclosures are up 3x around here, and there's essentially no residential construction going on. And our little neck of the woods is actually still gaining employment.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
When the average price of a new home has dropped nearly 30% and forecasts say 40%--it is astonishing that anyone would build... but there are pockets of it.
In this market it is about renovations, refits, commercial close ups, restoration work, kitchens, baths etc.
There are still new stores opening... malls being built, stores being built.
You just doing homes Dan? From what I have heard MN is fairly healthy. You in a small town?
We used to be able to give our guys enough leads through the warm months that they could pretty much coast through the winter... now we are generating them winter leads as well.
We all have to move with the times.
L
GardenStructure.com~Build for the Art of it! Decks Blog
No, I do virtual pen scratches on virtual paper. But I watch the construction business around, and there ain't any. I'm sure that remodeling is holding up a lot better than home-building, but there's simply not enough of that to backfill for the home construction downturn.Our area did get a little boost recently, when the king of Saudi Arabia flew in with his two 747s and spent about $2M buying trinkets. So there'll be more than coal in the stockings of shopkeepers this year. But, like I said, home construction is dead, and commercial construction is way down, since most businesses have a freeze on new spending, just to conserve their cash.You can advise people to move, but I wouldn't suggest that they move here. Yeah, there are only 50 carps going after each job instead of 100 elsewhere, but that's still not going to make the move worth it.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Sorry to hear that Dan.
Do you mind me asking what is the population within 1 hour of you?
LGardenStructure.com~Build for the Art of it! Decks Blog
Within an hour possibly 300-500K, but most of that would be right on the (northern) fringe. The county population is about 125K, and there's nothing of comparable size until you get near the Twin Cities -- 70 miles away.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Dan-- I would get a phone number (single number reach), which enables you to have a local number in the twin cities... and it is automatically forwarded to you on your cell or at home.
You need that pool of people to draw on.
That way you can advertise that number there... and get the leads since they think you are local.
L
GardenStructure.com~Build for the Art of it! Decks Blog
Like I said, I don't build anything other than castles in the sky, so it's not a concern for me (so long as I have my current job).
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
"I do virtual pen scratches on virtual paper"
That sounded like you do what I do--designs on the computer. Which I read... I am an architectural designer... or designer or architectural draftsman, or architect.
Funny how we jump to conclusions.
L
GardenStructure.com~Build for the Art of it! Decks Blog
Software architect.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
"There are still new stores opening... malls being built, stores being built."
Architecture firms in this area are laying off people en masse. But construction is still happening because at that point it's almost too late to stop. Once all the drawings, consultants, government permits, approvals, applications for variances, financing, contractors and subs have been acquired and scheduled, it's difficult to stop. Within the year, though, there'll be a lot less big projects.
Case in point: firm i was just with was doing cd's for a large mall outside Detroit. One of the worst places on this continent for a mall. Nothing to do but soldier on.
Yeah, one of the big mall developers (General Properties??) is just about bankrupt.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Speaking of which:http://money.cnn.com/2008/11/24/news/economy/malls_blackfriday/index.htmThis downward spiral has already claimed one notable name - No. 2 mall operator General Growth Properties (GGP) - which has said it is on the brink of bankruptcy.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
The amount of money that gets wasted by developers, at least at the planning level, is often atrocious. There's surprisingly little research or marketing studies. And a lot of shoot-from-the-hip decisions that create big problems. Problems that could easily be avoided with a little thought.
i foresee a lot of retail bankruptcies within the next couple years
Yeah, but the amount of waste on any project is pretty large, percentage wise. It's just more obvious the larger the project.I've spent my entire career studying how projects go awry, and how they tend to fail as you scale up to larger and larger. A big problem is trying to apply the same techniques to both small and large projects -- either you're going to over-manage the small project or under-manage the large one. And too many management schemes for large projects introduce their own expensive overhead and time delays (think Defense Department).The software industry's learned a lot about this, but even that industry is just in it's infancy in terms of being able to control it.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Lawrence,
short term locally I am pessimistic
long term locally AND globally I am overwhelmingly bullish--almost euphoric As I see it--there are 2 seperate things occuring simultaneously----and we are naturally focused on the closest and most immediate one.A very smart guy named Fareed Zakaria wrote a book recently "The Post American World"--the title is perhaps a little tongue-in-cheek----because zakaria carefully explains that the US hasn't really fallen behind----it's more that other countries have caught up-- India and China for example. globally AND here in the USA----- our population is simply exploding over the next 20 years. All of those people need to be fed and clothed---and increasingly they want to be housed better--and transported better---so long term--no matter how we slice it there will be tremendous economic activity. those of us who are in homebuilding or home improvement are pessimistic because we are currently taking a hit short term.
however-if you look around--plenty of people are doing just fine-------policemen,firemen, school teachers, insurance agents, nurses, doctors, many retirees and so forth--yes there 401k's might currently be 201K's---- but their income is solid.currently--they aren't spending much--but they will-it's simply a matter of time.---their dishwashers will break or their clothes driers--and they will replace them.- in my own household--a family of 4 -we own 3 vehicles,10 year old,6 year old,1 year old.- like it or not--within the next year at least one of those older vehicles will be REPLACED- hopefully with something more efficient---and within 2 years or so another vehicle will be added bringing us to 4 vehicles.the point is-a lot of us can DELAY purchases-- but in-evitably we will have to open our wallets----AND- the longer the delay goes on- the bigger the pent up demand will be--because the population continues to increase.when demand resumes-- it likely won't be the same as before-instead of mcmansions--it might be smaller,higher quality, greener, more urbaninstead of Escalades--it probably will be more like Volts,LOL. short term--what to do?- well I wouldn't want to be in the kitchen remodeling business--- that is HIGHLY discretionary--- but if I was in the business of replacing hot water heaters-- I would feel just fine.My neighbor- is a landscape contractor.- his installation business this year was at a virtual standstill- but his maintenace division------ quite solid.-----If you have a huge lawn and expensive landscaping--face it, you aren't gonna cut the grass yourself-- and he is doing just fine.
In my case------I think 2009 will look a lot like the late 80's /early 90s- repair,repair,repair,repair with few total roof replacements. Frankly i might do pretty well out of this because there are much better margins in repair than in replacement--and a dramatically lower need for employees.BTW---- the news media contributes to this--- but isn't to blame entirely.- face it- there are a lot of 24 hour news sources that HAVE to fill air time--their constant chatter fills people with doom and gloom outlooks.stephen
The problem is that the new America won't be much like the old one. We are being forced to live within our means, meaning that the days of 10% a year home appreciation (and accompanying HELOC money) are gone. People will have to replace cars, true, but instead of buying a new car every four years they'll run them into the ground at 10-12 years. Likewise everything else -- much less discretionary spending.In the near term, we owe our soul to the company store (China) and that debt's got to be paid off, so there will be considerable belt-tightening (if we know what's good for us).
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
DanH---- america in the future WILL look different--- but I don't see that as a problem-- i see it as a good thing and a great opportunity.WHAT it will look like I don't know--probably a combination of several things. Many new houses might be smaller, better designed, more efficient,more urbanOR there might be trmendous growth in homes well suited to multi generational living----a return to some past values.
for the last century, americans have typically seen the nuclear family---or following divorce--some fraction of the nuclear family as the preferred mode of living.- that might not be the case in the future. In my own case--one of the reasons I bought my existing home---is that I could see the strong possibility that in the future my mother and possibly my oldest sister might HAVE to live with me.
I could also see that my sons might stay within the household for extended periods of time-into adulthood my generation-we grew up-got educated-and moved out at 21 or so but now--- not so much from my observation
so-- I have a home now-that with virtually no modification one of my sons,if needed could marry and set up their own suite under this roof----with slight modification the other son could set up,yet a second suite--and yet also with modest investment a nother ground floor accomodation could b made for my mother----all without impacting the existing kitchen,dining room, den, living room, or the office/library.
the chance of ALL those things coming to pass are slight-the chance of ONE of those things coming to pass probably bettewr than 50/50 future homebuilding ternds might reflect that--and future remodeling trends as well As far as auto buying------I don't think americans ACTUALLY traded in their cars every four years the way the auto industry would have us believe we should---and I don't think a 10 year old car is necissarily run into the ground---one of my vehicles is a 10 year old F150-----as base a model as ever made-- and it is quite solid. I suspect that the demographics of an ever growing population will mean that vehicle sales will be solid over time -----EVEN as the average age of the fleet increases. the sales might be solid-- but they might not be american cars as far as I can tell--a little belt tightening and a little consolidation of consumer choices might be a GOOD thing! walk down the cereal aisle in a grocery store--and then tell me we wouldn't be better off with a few LESS choices, LOL some things might even have the potential for growth as others contract sales of expensive pre-preprepared,boxed,processed,convience stuff might wane---but belt tightening and working reduced hours might bring actual COOKING into vogueso-while the future might well look different--- I bet it will also still look familiar-and those who can adapt might well even PROSPER!
stephen
hazlett,
I agree in principle with much of what you've said. A few noteable exceptions.. Trying to pin down typical family buying habits is like trying to pin down air..
So some will trade cars every year or even less, some will buy every decade. (If Warren Buffit still has his old pickup there's hope for us prudent people yet)
Same with houses As you pointed out the new trend will be towards multi generational dwellings like the rest of the world has.. However I don't see a lot of decrease in prepackaged food. time is critical and time spent preparing meals etc.. is pretty much a luxury few have..
Soccer practice, dance lessons, PTA meetings, civic afairs etc.. will continue to place a premium on time which precludes scratch making mealings.. Mom will buy eggos rather than take the time to make them herself from scratch.
Don't forget the typical family needs 2 incomes to make ends meet.
However frequent job changes and career moves will be far more normal.
Frenchy,
there have been numerous studies which show that 2 income families don't recieve NEARLY the economic benefit from the 2nd income as they think--that the lions share goes to increased clothing,transportation and day care costs
however--for the sake of discussion lets operate on the premise that 2 incomes ARE necissary.
in a multi generational household--new patterns( or rather OLD patterns) may emerge.I don't consider the following as,by any means, something ideal or something to be WISHED for
however
concievably
MORE THAN THEORETICALLY
under my roof we could have in the next few years
My income,my wife and her income, my son and his income, my other son and his income, and 2 daughter in laws and THEIR incomes, and my mother and HER income.
again- i certainley don't HOPE for that--but a few years ago the norm might have been at least 4 seperate households out of those 7 incomes economically i see considerable opportunities there for savings,investment and domestic arrangements. Almost certainley several of the people who would ordinarily be working-would not HAVE to work--young mothers might be able to stay at home--or a lay-off here and there be absorbed. there are tremendous flexible possibilities for actual increased leisure time, reduced work, and economic gain through shared housing,shared transportaion, zero day care etc.
I don't position this as something to be strived for-but rather as a recognition of what the future COULD look like---and there is considerable historical and CURRENT demonstrations of similar households.-they just arent the recent american norm.
stephen
here have been numerous studies which show that 2 income families don't recieve NEARLY the economic benefit from the 2nd income as they think--that the lions share goes to increased clothing,transportation and day care costs
I would have to say that the results probably vary by region and economic level within society.
My wife and I looked at maybe 20 preschools before picking one with structure and a development plan. It costs us roughly $800 per month for my little one. It's been well worth it. The socialization and early learning skills have made a huge difference.
I doubt my oldest or middle child would have benefitted as much.
My wife can make $80K a year working 7 out of ever 14 days. She averages $65K a year with no overtime at all.
I see mothers dropping kids off at the same place on their way to work at Home Depot or the COCA COLA plant, ect, ect,ect...............
Most of them probably just barely cover the expenses of going to work.
But here's another issue........
Many of those mothers in my area aren't working for money. They are working for benefits.
SO many small construction, and trade/craft related businesses in general never did, or can no longer afford to.....................offer health insurance.
Probably the mothers working at home depot or Walmart-aren't getting health benefits either however-that gets us to a diffent problem.
we have a system ( that's collapsing under obselesence) in which people recieve health benefits primarily from their employer------forcing the employerAND the employees into VERY in-effective applications of their labor,capital,net worth and resources in general
stephen
Probably the mothers working at home depot or Walmart-aren't getting health benefits either
Both around here offer benefits to part time employees at absurd buy-in rates. Our local Home Depot had people working there one or two days a week and then for themselves the rest of the time.
The entire HD check went to pay for benefits.
My old business partner did just that for two years.
Crazy
SO if you seperate health insurance from employment?
How do you provide it? Make it free to all and it will crush under it's own weight as well/.
Certainly there's a good chance I wouldn't still be working for my current employer if it weren't for health insurance. If nothing else I can't afford to retire yet, since buying insurance until we qualify for Medicare would eat me alive.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
I'm trying to read what you're saying here carefully. A couple of people I have heard from who have been in business a long time say this is familiar territory, that the current "credit crisis" will be followed by a brief period of sanity and then followed by another credit bubble. Lending will be more carefully regulated but lenders will try to find ways to make more loans and make more money. First they need to recover from the latest drinking binge, but they'll want another.
What we need to figure out is why the economy got along just fine until 1984 without a credit bubble, then suddenly changed. Find the motivations for that change and reverse them (though slowly, so as not to shock the economy too badly). I suspect that the Alternative Mortgage Transaction Parity Act of 1982 is a small part of the puzzle, but likely various Fed and Treasury policies are bigger factors.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
What we need to figure out is why the economy got along just fine until 1984 without a credit bubble,
In or around 1984, tax law changed. In the few years prior to that there was incentive to run up new debt, tax wise.
Don't remember the specifics, but remember my dad being pi$$ed about the change and promptly paying everything, cars included, off in full.
The odd thing is (refer to that chart again) that AFTER 1984 the use of credit skyrocketed.It may be that the law change you're thinking about was removing the tax exemption for interest payments (other than mortgage). But my recollection is that that change occurred in the 70s.(Of course, part of what happened starting ca 1984 is that people began using, in a big way, home equity loans, which WERE made tax-exempt some time in that timeframe. But I doubt that most people were motivated that much by the tax-exempt status.)
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
I'll tell you who's to blame, it's simple. Women. Credit has been extended, used, and now topped out to prop up our standard of living all be it false since we don't really have the money, just to impress/maintain relations with women. Really, if women preferred men that rode the city bus over those driving Jaguars things would really be different.
Much of my extended credit has been for just these same ideals with never and current. Living room set I would have never bought, vacations I would have never taken, etc...
In all seriousness I'll chime in latter with more time. As I sit at ground zero, Mid-Michigan. State Unemployment fund will be bankrupt this year, 3 of GM's largest plants demolished in the last 3 three years within a 5mi radius of here, union halls full, auto makers and building trades, I've seen tradesmen lose their houses this year, 2 largest hospitals for the area have laid off over 300 this year, and the only 3 jobs in construction listed on the job websites within 50 miles are actually in Iraq.
I always said that if it weren't for women us men would be still be living in caves, hunting, eating, fighting and drinking home made moonshine.God made Eve cause he was smart enough to see man on his own was heading nowhere and the evolutionary trail was getting cold........My Blog
> I always said that if it weren't for women us men would be still be living in caves, hunting, eating, fighting and drinking home made moonshine.You make that sound like a bad thing.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
no not at all....the way things are going we may be back in the original hood before we know it........We gotta do it different this time though........My Blog
The economy is so big and complicated that it is probably impossible to point to anything and say with any certainty that it is responsible for what has happened.
My own theory is that the creation of ever more esoteric derivative securities has led to too much speculation and an ever smaller part of our economy is devoted to real wealth creation. Turning the apples from my tree into pies represents real wealth creation. Selling you today the right to harvest my apples in the future doesn't really create anything, nor does your selling him the right to the harvest in 2012 and her the right to harvest in 2020. The same amount of apples will still be available. Plus, all those future rights won't be worth much after the local beaver cuts the tree down. Don't ask why I used this as an example. I did recently come into some firewood:-)
And a beaver hat ???
There are several living in the pond just below the house, so it's hard to identify the spcific culprit. Maybe waterboarding one of them will produce a confession.
I would like to bet that the entity you sell the 2012 harvest rights to will default on their obligation to you. How's that for creating some wealth?
maybe we can buy insurance from AIG.
... and when we do I'll make another bet on whether they'll have to pay on the policy.
Like you were saying, it's basically a bunch of noise. IMO you should be able to buy stock and provide capital to a company. All this other stuff that's happening is stupid.
Hey, don't knock it. It's every guy's goal to get some beaver.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Edited 11/25/2008 4:06 pm by DanH
You are not alone in that theory, there was a program on the radio show "this american life" (PBS on the radio), entitled " the global pool of money grew too hungry"
It basically states the cause of the problem as "ever more esoteric securities leading to too much speculation and an ever smaller part of our economy devoted to real wealth creation", in other words anyway. There was a huge market for all those "esoteric securities".
The best piece I've read recently about this whole mess. http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom
Man I can't believe I read the whole nine pages........but this all just confirms my declaration (and buttkicks, remember him?)We are sooooo screwed.My Blog
Yeah, it's a good piece. I'm about halfway through it.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
great stuff, thank you very much.
I too recognized this calamity in the making. Of course I didn't know what it was or what would happen, but I knew that something had caused home values to skyrocket way above what they were actually worth. I thought there would be a correction but I had no idea how deep it ran.
Nor do I have any idea how bad its going to get. What do we do now? Where is all this going? What is going to happen to "Wall Street" now?
You all do realize why the Am. Gov. will bail out Freddy, Fannie, Big three, AGI, Citi bank and the like to the tune of 700 billion but won't really help the Am. people by dividing that out into 1/2 million dollars after taxes to every tax payer to do what they wish as they see fit, don't you?
It all comes back to that same speculation problem. It would be fantastic for every taxpayer to receive 1/2 mill. of our own money and not that useless $600 we already got. But it won't happen because everyone would pay off their GM car loans, houses, and credit cards and those speculators that got us here in the first place would still go belly up.
My feelings remain even with that fact that we each get the 1/2 mill. regardless and let the fat cats than fend for themselves.
On a side note something I discovered talking to people is; funny WAMU was the first to go, in my credit card collection they where the most ruthless bastards. They saw their demise coming for awhile and where trying to recoup. Problem is everyone I've talked to that had a WAMU card, at the first opportunity transferred all their balances to other companies. This was even before all the trouble was announced and I think their ruthlessness ended up being counter productive as the same story played out across the country and their card holders said screw you.
One reason that the government will spend trillions to bail out the banks but not spend a lousy 25 billion to bail out the auto industry was explained by C. Northcote Parkinson, in particular, Parkinson's Law of Triviality:http://en.wikipedia.org/wiki/Parkinson%27s_Law_of_TrivialityNo one in government understands the banking industry, so Congress assumes that the experts are right and give them what they want with hardly a question. But everyone in Congress believes that they understand the auto industry, and hence they'll debate it to death.(BTW, it's nowhere near a half-million per taxpayer. Do the arithmetic. Figure $7T total bailout so far, about 200M taxpayers, that's about $35K per taxpayer.)
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
That explains why the few church projects I've worked on seem to be so disproportionately a pain in the arse as every committee/board/elder member etc... some how becomes an owner's project superintendent.<!----><!----><!---->
I told the painter on the last one after a blue haired elder insisted on a color change mid wall, just to keep going (never mind contract issues) no matter how adamant they, or the next one to come along is. Told him by the time the first one comes back and he where to listen to all those that follow he'd be back to the original color and she'd be in a tizzy anyway. <!----><!---->
Figured we could pull an experiment on faith and each color change request that came to him to tell them they'd have to take it up with the Lord. Finial colors didn't change from the Id drawings made by the wife of the highest donor.<!----><!---->
"(BTW, it's nowhere near a half-million per taxpayer. Do the arithmetic. Figure $7T total bailout so far, about 200M taxpayers, that's about $35K per taxpayer.)"
My apologies, but even at $35K I think the theory still holds weight, or at least every rusted out Delta 88 and Impala will have 17" rims and display screens in the rear seat head rest.
... in other words, we should just give the $700B to the Chinese?
We'll be giving them a hell of a lot more than that, before this is over with.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Just curious Dan to revist, now that it’s been a couple months since this and we’re getting a taste of Obama’s plans even if it was only 35k than and not ½ mill. What do you think it’s up to by now? Do you think by the end of his term we may actually see that half a million worth mark per taxpayer if all related spending to bailout/stimulus were distributed amongst the tax paying pool? I’d almost bet on it now with the rate of spending, not to mention that Olympic size pool of income tax paying citizens will dry up to a drop in the bucket at this rate. I’m outta that pool now myself.
I think it's still holding around the $35K figure. Remember, the original number was $7T total (with 1/3 to 1/2 of that on Bush's watch), accounting for all the funny money transfers in Treasury, etc, and that total hasn't changed much. The stimulus package is only about 10% of that.
The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness. -John Kenneth Galbraith
Bush's watch, Obama's signature, how's that for change? On top of the budget he plans to sign that totals(with inflation figured)more than any one person in human history has ever spent on any thing. “Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety†–Benjamin Franklin"I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it." -- Benjamin Franklin
Do your math again, not as much as you think!!
Sorry just saw that dan corrected. I still think that it only works out to 3500/person.
Edited 11/26/2008 6:54 pm ET by frammer52
Yeah, that's a good point: Much of the small business (and small farming) economy in the US is in effect subsidized by larger companies who employ the wives who work for bennies. As larger companies drop bennies it doesn't just affect their employees, it affects many of the small businesses who have so far avoided providing health insurance, even for their principals, but may now be forced into it.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Well I built this house with that goal in mind.. If you've read the stuff I've written about it You'll know that was my original goal. It is essentially three separate apartments with a common entrance. I recognize the need for privacy but I understood the advantage of a multi generational home..
With both daughters off starting their own families it didn't work as planned .. yet!
But so far they are renting and barely getting by. Home ownership promises to be a distant possibility.
While I don't wish them anything less than their dreams I do understand that by having a safety net available for them they can reach further without the risk of total collapse. Isn't that afterall the goal of any responsible parent?
The problem is, for the past 24 years -- since 1984 -- America has been living on its credit card. (I think I posted the graph earlier in this thread. Check it out if you don't know what I'm talking about.)So now we're faced with two realities:
-- We must tighten our belts to pay off the loans. (Yeah, we can try to inflate our way out of it, but that just costs us in other ways.)
-- After the loans are paid off we must learn to live within our means.So near-term we're in for some real pain, and after that, once we settle down to a "steady state", America will look more like Norway and less like Disneyland.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Dan,
I am very well of what you are talking about.
However
I don't make the rules all I can do is observe what the "rules" are--and place my bets accordingly.
I don't suggest this is the right way to proceed---rather I simply observe that---
politicians being politicians they will inflate the economy--they really don't have any other choice. they can't cut defense, they can't cut social security,they can't RAISE the taxes required and so on.
so inflation becomes there next logical step. Republicans and democrats alike-but primarily republicans have operated on the absolutely morally bankrupt premise that we could stick our children with the tab. I am not advocating inflation,mind you-nor do I deny the likely effectsIt's just that I mentally try to step off to the side and view the situation and the choices available-without a dog in the fight
and then position myself accordingly. As YOU note--the positioning may be painfull.
stephen
I don't disagree that there will be a bit more inflation (and I don't necessarily believe that that's bad), but inflation's just a very small part of the puzzle. In general, so long as inflation is (over the short/medium term) reasonably constant and predictable, it doesn't really affect anyone, beyond helping to "grease" the economy in a couple of minor ways, and beyond it's affect on the trade balance. Any loan you get has inflation factored in, any property you buy will appreciate to compensate for inflation, etc.My point is simply that we flat out can't borrow any more. All of the people who are credit-worthy (and many who aren't) have in effect borrowed up to their credit limits, and there's simply no way to keep the Ponzi scheme going any further. One way or another the economy is going to be forced to go through some sort of transformation, and along with it our society will have to transform. I'm hopeful (if not particularly optimistic) that with Obama in charge the transformation will produce more of a butterfly than a moth, or at least not a deformed moth. (But I'd sure like to be hearing more words from Obama indicative of an appreciation of this problem.)
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
DanH,
I agree that the economy and society are in for transformation in the future
what it is going to be-I am not sure ofthat's why I suspect the housing market in the future may very well encompass BOTH Susan Saranka(sic) style houses--and the sort of multi generational possibilities I described. As an aside-while this thread was developing- i was also on the phone with L.L. Bean doing some shopping
I ordered a new dog bed for a puppy I have arriving and ALSO ordered a Xmas gift for my wife.- in the process-and over the phone-I applied for a new credit card with certain perks that we use a lot-and within minutes, over the phone i am set up with a new credit card for $20,000 Of course I will close out the old one-but the point is the american consumer isn't necissarily tapped out. I am not- and I have a pretty modest lifestyle taken overall. Like a lot of folks- i am not necissarily spending on a lot of frills-but being selectively extravagant-when we are less fearfull about our immediate prospects-we will spend again.stephen
Yeah, I'm not tapped out either -- my total debt at present is about $200, and I suspect I could easily get signature credit for $100K if I shopped for it. But you (apparently) and I aren't really factors in the credit bubble -- we're kind of an insular part of the economy which doesn't react to the motivations of the "masses". Oddly, though, you and I are helping to keep the economy afloat at present (even though we've both cut back some in these uncertain times), since we have no debts to pay and have some savings to fall back on.(BTW, it's Suskana.)
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
"(BTW, it's Suskana.)"
Sarah Susanka
Jon Blakemore RappahannockINC.com Fredericksburg, VA
You got me there. Googled it but didn't go far enough, I guess.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
We're similarly situated to you re debt and savings. We'll probably continue to buy what we've always bought, concentrate on earning what we've earned, and refrain from deficit spending as always (although we do have a mortgage). I project that we will try to borrow for real estate investment within one year.
Question is, what percentage of the economy are folks like us? We did not buy a 3500 foot house, 2 SUVs, a boat, or anything like that. It would be interesting to know what percentage of consumer spending was based on stupid debt rather than either conservative debt or current income.
Another question is, is your livelihood based on other people's irresponsible deficit spending. Mine sometimes is. Remodeled last year for a guy with a good job and a HELOC. Did a major project for someone with 100% cash but whose wealth is based on auto sales, which are often deficit spending.
I predict a couple of years of very minimal spending (by comparison with the last ten) and then it we see things move up again.
My livelihood is thankfully tied to a company that's in a pretty strong position, and not usually subject (very much) to economic ups and downs. That said, because NO ONE in business is spending money if they can avoid it this quarter, our sales this year will take a serious hit (since we sell "durable goods" that would normally be amortized over 5 years or more). In a way we'd be in better shape if we were selling paper clips.So my job isn't THAT secure.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Susan is great. Her books are worth a look.
There's also the tiny house movement going on. I've been watching it with interest.
http://www.tumbleweedhouses.com/
I understand the concept of a small house.. I lived for over 5 years in a 16 foot travel trailer while in the Navy.. I liked it!
However small is not always a good solution.. Not for everybody under every situation.
I'm dreaming of 160 acres in oregon with a main house and 10-12 mini houses. Fishing, vacation camp type thing for profit and room for all the people I love to help me grow food! =) Chickens, rabbits, elk, salmon and veggies galore.
There's a place like that for sale here. Not as many acres... only 40... but it's waterfront and already has the cabins. $11,000,000 sound OK?
http://www.marvistaresort.com/
That will do! Now, I've got $50, what do you have? Want to join my commune? LOL! We'll need somebody who can drive a boat.....
If I bring my boat am I in?
Absolutely! Can you fish? You can have cabin #4.
=)
But the idea isn't a small house per se, but rather a "not so big house" -- eliminating most of the space that's wasted in McMansions. She shows how dividing a small house into a number of smaller "intimate" areas (vs the more popular style of "opening up" the layout) results in a more livable home.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Susan's designs are stunning. I met her once and got to see a house. Spacious, but extemely well laid out. The use of light was extraordiary. Everything well though out and very, very inviting and livable. Lot's of very necessary storage space, but nothing, not one inch, wasted. No goofy formal dining rooms, no vast bathrooms to clean that never get used, no pitched roof that wastes space. She uses wonderful materials, too.
Not all that wasted space is indeed wasted! Americans are spending more and more time at home as the cost of and the hassle of transportation is increasing.. soaring ceilings large (relatively) vistas and open rooms help to reduce cabin fever..
I do agree that space used to impress or space used for extremely limited occasions is a waste. Mc Manison tend to be guilty of that but with relatively minor changes that space can have a useful function. Not all such space is actaully wasted..
It may be a site for future growth sort of an unfinished basement on the second or third floor.. Use it for this now and that later..
example; soaring entranceways could be a site for displays of family portraits or art work.. a place to display collections of posters or other collections etc.. That family dining room can be made into a dance studio for ballroom dancing, billards, or ping-pong.. Maybe a layout for model trains or a collection of bird feathers, whatever..
So now we're faced with two realities:-- We must tighten our belts to pay off the loans. (Yeah, we can try to inflate our way out of it, but that just costs us in other ways.)-- After the loans are paid off we must learn to live within our means.
So near-term we're in for some real pain, and after that, once we settle down to a "steady state", America will look more like Norway and less like Disneyland.
I think once America is weened off of the credit pacifier,
Things will actually be better for longer.
When you take into account all of the money paid in interest every year?
ANd conver that to buying dollars? Our buying power probably doubles or triples.
But how long will it take? Don't know but I just drove by a realtor's officwe that had a sign out front "Buy with 2 1/2% down. We can get you a mortgage".
May take a while
> When you take into account all of the money paid in interest every year?
>
> ANd conver that to buying dollars? Our buying power probably doubles or triples.The problem is that for 24 years we've been borrowing to pay the interest. And not really making much of a payment at all on the principal. We've been like a 20-something on a credit card binge, buying up all the flashy stuff at Best Buy. Life isn't going to be like that any more, even after the loans are paid down. From now on we only buy what we can afford. From that standpoint our "standard of living" will have to drop.
The mark of the immature man is that he wants to die nobly for a cause, while the mark of a mature man is that he wants to live humbly for one. --Wilhelm Stekel
Well put Stephen,
Fareed is a brilliant guy. I agree with everything you have thrown out. I believe a lower US dollar will help the situation also--which with printing money is an assurance.
Wouldn't you love to interview him as a carpenter and pick his brain for an hour? Hey... Taunton-- can you arrange this?
LGardenStructure.com~Build for the Art of it! Decks Blog
Lawrence,since the government controlls the printing press----long term they are going to HAVE to try to inflate their way out of this mess( however they will call this intentional inflation something else)almost certainley smart money is positioning itself for that trend right now----and once positioned the printing presses will be lubed up.
stephen
Gold... buy gold, no, that's not realistic for most of us.
In this situation... any tangible assets. Lets suppose we will have 20% inflation over the next 2 years.
Mortgage needs to be locked in for 5 years like today. (I did that a few months back).
Buy whatever you can afford for tangible assets that will not depreciate.
Buy a house now at 30-40% discount... factor in recovery and inflation... that home may double in the next 5-10 years.
Do you think it would be tough to rent in present circumstances in most areas?
L
GardenStructure.com~Build for the Art of it! Decks Blog
Edited 11/25/2008 8:45 am ET by Lawrence
or farmland,or stocks in companies that can pass on increased prices to consumers,or companies that can do business in emerging economies, and so on
many possibilities.
stephen
Credit swap caused the crises, but people's reactions are what help drive down the movement of money.
I think it's all about uncertainty.
In marketing circles, people's buying patters are measured on the VALS scale from harvard. It like one big Maslow's Hierarchy of Needs constructed to explain and predict (therefore sell into) buying patterns.
The "belonger" category is made up of people who follow. They don't like new things, are flummoxed by undertainty (elections, wars, recessions) and hunker down and put their money in their pocket in any uncertainty. The other categories react to economic stress by switching to belongers. It's the biggest class of spending profile and gets bigger in times of stress.
You get people nervous and it's one big domino effect.
they all hunker down and adopt a wait and watch attitude with their money.
Edited 11/24/2008 1:01 pm ET by SquarePeg
"emotional reaction to irresponsible press"
I don't think this recession, the falling real estate values, the woes of the car industry worldwide, and the melt down of AIG are made up or created by the press. This is real stuff.
Assuming it is imaginary, then this makes a rescue plan even more important, as this would bring imaginary confidence.
That doesn't even resemble what was said Scooter-- read it again.
LGardenStructure.com~Build for the Art of it! Decks Blog
The premise was that the recession was imaginary, and the questions were whether the recession is real to us. I dispute the premise. I believe the recession is real, and is not imaginary.
But you are right, I did not answer the man's questions.
1. The building trades are down here, about 30%.
2. This can not go on more than a year. Stuff wears out.
3. Real Estate and Stocks will go up over time--they always do. But it will take time.Regards, Scooter "I may be drunk, but you're crazy, and I'll be sober tomorrow." WC Fields, "Its a Gift" 1934
I'm in the financial news sector and we certainly aren't fear-mongering, just doing the best job possible to cover this mess. Anything less would be cause us to lose our client-base, who pay a fair amount for their service.