why i am scared $hitless

[spence]

I think this is a reasonable fear. I remember reading an article some time ago about LB having their derivative holdings rated AAA. We all know how that went.

That being said, I think there's a better chance that this crisis will deflate, the economy won't crash, we'll see a recession, and the power of Wall Street will shift over the next decade or so to Bejing, Tokyo and Dubai.

For our children to enjoy our quality of life, America will need to lead the World to energy freedom, which we are more than capable of doing.

This isn't just a market correction, it's a way of life correction. We can no longer consume so much more per capita than the rest of the world.

-spence

[fishpoopoo]

Originally Posted by spence

For our children to enjoy our quality of life, America will need to lead the World to energy freedom, which we are more than capable of doing.

This isn't just a market correction, it's a way of life correction. We can no longer consume so much more per capita than the rest of the world.

-spence

That's what I'm concerned about. The prospect of future generations. Unless something is done now, our children will inherit and toil under some severely adverse conditions. Like a (literally) bankrupt nation.

I don't think either party has a clue right now about how to "fix" or even address our economic problems. And I mean that.

Only one congresscritter - who is a disciple of the Austrian School - "gets it." Unfortunately, Ron Paul has been viewed as somewhat of a loon by the mainstream. Maybe people will pay attention, now that Keynsian and Monetary intervention are spectacularly blowing up in our faces.

[Nebe]

pardon my uneducated view on everything, but what is going on now is quite simple.

In the name of capitalism, this great country of ours has enabeled businesses to outsource jobs here in the US.. That boosts corperate profits.. In the mean time there are millions of workers who lost their jobs and had to find lower paying jobs.. House prices soared off of the notion that many americans viewed home ownership as a source of income from re-financing..State government turned a blind eye to higher housing costs because come re-evaluation time, it means more tax revenue.. thus as a result, a huge false economy was created.
Comparing it to fishing is simple-
This country is broke because the average guy who works a manufacturing job, or any sort of job that could be outsourced is flat broke..(we will call them the pogies) As a result, small businesses across the nation who cater to this group of people (we'll call them the schoolie bass) are experiencing huge profit loss because they are not selling anything (eating pogies)..Now they are dieing off from starvation or at at the very least are extremely thin.. From there banks who are issuing them credit (bluefish) are forced with great pressure to make up for the losses, so they dabble in mortgages to help the broke pogies fatten up to make the schoolie bass fatten up..

The problem with everything is that corporate profits (the dogfish) have kept on climbing and climbing and climbing (getting fatter and fatter and fatter) And not much has been done to protect the pogies..


Now what we have is a huge fish kill. The dogfish are dieing, the bass, the blues and the pogies are all suffering from a large ecosystem crash..

Why? because the goverment (Fisheries managment) slashed over fishing laws for dogfish and let them feed and reproduce and did nothing to protect the base of the food pyramid.. (the pogies) Also, fisheries managment was too busy throwing a huge party for themselves (Iraq) based upon the notion that if they had that party, it would improve moral well being in its ranks and racked up huge debt, when in reality, that huge party budget should have been spent improving water quality for the pogies, regulating dogfish levels, and also, protecting the striped bass, who not only provide food for the dogfish (well not in real life) but would also fertilize the water with thier poop, and in turn would create the right balance for phytoplankton to grow, which the pogies eat...

Make sense?

[fishpoopoo]

Originally Posted by Nebe

Make sense?

Not quite.

Since 1987 Alan Greenspan opened up the floodgates to the money supply, to bail out Wall St. on several occasions and make a lame attempt to ignite growth during downturns.

This hot money found its way into the hands of consumers in the form of cheap and easy to get mortgages and zero percent APR credit cards.

Folks went nuts with the spending on houses and imported crap.

Things were great as long as house prices kept going up and rates stayed low. People could buy and flip homes homes with artificially low monthly payments, extract home equity, and buy more imported $hit from overseas. Folks didn't save a dime.

Then the bubble popped, mortgage payments reset to much higher payments, and folks got caught with their pants down.

All the while, the weak dollar (caused by money printing) and demand from Chindia made gas prices skyrocket. So we end up spending more on imports (more $/bbl crude).

Folks chose to make bad decisions with cheap money, and consume rather than invest and save.

Now, I understand we're a service economy and we don't make jack anymore. We don't export anything but jobs, it seems.

This is a reflection on the natural evolution of economies, but also a failing on the part of U.S. industry. Example: Do the Big 3 build anything right now that we want to drive? Why do so many people drive Japanese cars now?

On top of that, investment and savings that you and I make goes into things like building factories and upgrading infrastructure here in the States. All of which produce a future benefit.

Economy = Consumption + Investment + Gov't Spending + Net Exports.

Which one of these line items produces a future benefit to us?

Hint:

Not consumption!

Not government spending!

We're importing more than we export!

[fishpoopoo]

an ironic p.s.

when oil prices shot up 50%+ this past year, u.s. companies were re-thinking overseas contract manufacturing, because the cost of shipping was getting prohibitive.

so if there was a bright spot in energy spiking up ... it would have meant the return of manufacturing jobs here!

now that the world economy is going into the toilet, it's possible crude will hit $50/bbl and we'll have cheap gas again, for a short while.

[spence]

Originally Posted by fishpoopoo

so if there was a bright spot in energy spiking up ... it would have meant the return of manufacturing jobs here!

I'm already hearing this at companies I visit.

-spence