Credit, Monetary Policy, Depressions, and More!

[mkemse]

It will take forever for me to respond to each point.

Correct me if I am wrong but are you saying the economy wouldnt have taken a nose dive if it wasnt for the problem that came about in the real estate market and if so was it not cuased by a series of natural events (huricanes) in conjunction with bad business foresight?

Not sure on that, but everything SEEMS to have started with the Sub Prime Crisis and snow balled to where we are now

[Carpe Coma]

It would have dived eventually. Too many people were engaging in stupid and/or shortsighted practices for things to have been sustained. People were getting into agreements they didn't understand (when you hear talk about "unwinding" agreements, they mean actually finding out who owes what to whom), lying to their risk assessment people/software, and getting way over leveraged. Another thing that didn't help was the removal of the uptick rule on short sales. There was a lot of things converging on this debacle. The real estate pop was just the domino that fell first, and as it was closely tied to the credit markets and banks, they felt it first. We may have ended in a somewhat different mess, but it still would have been a mess. There is "bad business foresight" and there is outright stupidity/malfeasance. Just like a depression is from the psychology of scarcity, a bubble is from the psychology of a mob. I could probably make a post as long as that last one just talking about the things that contributed.

The hurricanes didn't help, but that certainly didn't pop the bubble. Yes, Florida is one of the states which suffered the greatest housing decline, but California and Michigan were right up at the top as well. The first big glaring sign was the summer of 2007. That's when the MBS market locked up. I think hardly anyone expected this to propagate like it has. Instead, almost everyone was standing around going "wtf?".

[DuncanONeil]

Not sure on that, but everything SEEMS to have started with the Sub Prime Crisis and snow balled to where we are now

The same people that created the sub-prime problem are now trying to tell us they have the answer for the problem they created.

[mkemse]

The same people that created the sub-prime problem are now trying to tell us they have the answer for the problem they created.

Yep

Like I heard yesterday, some Republicns are complainig about the size of the stimuls package, and 1 Democrat said "They drove us into the ditch, now they are complaining about the size of the tow truck to get it out"

[wmrs2]

Thank you for this thread. I am learning some things here and from informed people in the news media. One theme that rings true is that there is not any one political party responsible economic bad times. If fact, the number one theme seems to be that the economy is in a cycle and that in the cycle is that it is taking a larger than normal dip. I am confident that the economy will come back but I am also thankful that we still have the strongest economy in the world. Other countries are having more difficult times than the USA. It is a world crisis and to blame ourselves totally seems to be the wrong psychological thing to do.

I think the USA is doing the correct thing in shifting to a non fossil economy and a new technology for energy. This may change everything economically like the computer technology did in the past. What do you think about this? Your opinion would be appreciated.

[mkemse]

Thank you for this thread. I am learning some things here and from informed people in the news media. One theme that rings true is that there is not any one political party responsible economic bad times. If fact, the number one theme seems to be that the economy is in a cycle and that in the cycle is that it is taking a larger than normal dip. I am confident that the economy will come back but I am also thankful that we still have the strongest economy in the world. Other countries are having more difficult times than the USA. It is a world crisis and to blame ourselves totally seems to be the wrong psychological thing to do.

I think the USA is doing the correct thing in shifting to a non fossil economy and a new technology for energy. This may change everything economically like the computer technology did in the past. What do you think about this? Your opinion would be appreciated.

I agree the Economy will turn aroung but like Waren Buffet said, "It will turn around the only question is when" His view it we will remain in the Receession for most if not all of 2009 with a turn arounds in early to mid 2010, and this is a wolrd wide issue not just an american issue the wholeworlds economy is in bad shape
As far as the Fissel Fuel goes it serves 2 puposes less US dependency on inported Oil but it will also give us a better more green eviroment and less pollution so it is a win win situation for us