The coming economic crisis

[de_paradise]

In late 2008 when things were looking grim, the problem was solved by massive borrowing and spending by governments around the world, but we see now that this was a temporary bandage and in the USA and Europe, not enough to patch over the problems-setting the stage for a deeper crisis.

 

At the moment stock markets are on their knees due to lowering expectations, and a negative shock now can set off a chain reaction to really crater the markets. I am certainly not an alarmist, but pretty prudent and conservative, and when risk rises I dont ignore it. Its like that threatcon system in America, well the color just changed to orange.

 

If you were thinking about getting that cabin in the mountains ready and stocked up, time to do so before the hammer falls.

If you were thinking about making major purchases, Id advise against it, and instead buy certified gold bullion bars from a major gold exchange, or the ETF.

Its the USA where it will be kind of dangerous due to the social inequality and guns, I dont think here in Europe it will get too messy.

 

A recession is a recession, you get through it. Personally my living standard is poverty line level so it wont make much difference to me as long as food supply is kept up.

[TheSongsofDistantEarth]

In late 2008 when things were looking grim, the problem was solved by massive borrowing and spending by governments around the world, but we see now that this was a temporary bandage and in the USA and Europe, not enough to patch over the problems-setting the stage for a deeper crisis.

 

At the moment stock markets are on their knees due to lowering expectations, and a negative shock now can set off a chain reaction to really crater the markets. I am certainly not an alarmist, but pretty prudent and conservative, and when risk rises I dont ignore it. Its like that threatcon system in America, well the color just changed to orange.

 

If you were thinking about getting that cabin in the mountains ready and stocked up, time to do so before the hammer falls.

If you were thinking about making major purchases, Id advise against it, and instead buy certified gold bullion bars from a major gold exchange, or the ETF.

Its the USA where it will be kind of dangerous due to the social inequality and guns, I dont think here in Europe it will get too messy.

 

A recession is a recession, you get through it. Personally my living standard is poverty line level so it wont make much difference to me as long as food supply is kept up.

In my opinion, the whole 2012 thing will be a catastrophic worldwide economic crisis the likes of which the world has never seen before. It is obvious that the huge money interests gamed and rigged House of Cards continues unchanged, and the world interdependency of economies will become tumbling dominoes. But I'm not talking recession, here. But an extended depression that will reign chaos and destruction everywhere. And Europe is not safer. Recall the recent riots in Greece. Unless you've been carefully planning for a long, long time, and can be totally self-sufficient for years (be prepared to extract your own bad teeth, appendicitis will likely kill you unless you can heal it yourself with herbs and qi gong).

[Enishi]

Yep. The whole unsustainable monolith of banking interests, corporations that benefit from little regulation (or regulation designed to crowd out smaller businesses) and welfare parasitism is coming to an end.

 

I know lots of survivalist types who are planning for when TSHTF.

 

Truth be told, I don't like the string of thought among many extremist right-wing survivalists where-in they want to stock up several years worth of guns, ammo and food in a fort out in the wildnerness and shoot all the 'unworthys' who come along.

 

Preparations are definitely in order, but I would want to help out as many others as possible when the Big One hits.

 

My hope is that after several decades of chaos, the world will be more integrated and interdependant than it is now even, with mass communication and increasing knowledge still in place, but with less centralized tyranny and corporate exploitation.

Edited July 6, 2010 by Enishi

[TheSongsofDistantEarth]

Enishi, you're going to have to change your avatar WTSHTF, that little beast looks hungry!

[Enishi]

ROFL!!

 

Yes the ravenous Enishi beast is going to be greedily hog ALL the food and women when the end comes.

[shaolin]

Very interesting topic.

 

What exactly can lead to things getting that bad and how likley is it that these things can happen?

 

Ive heard about these kind of predictions, but I've not yet heard a detailed and realistic explanation of what could cause such a serious situation.

[joeblast]

Amusing how "the new deal II" policies are making the economy and the stock market behave...just like they did during the great depression. Who'da thunk??

 

Has the world learned its lesson on entitlement spending yet? I doubt it. Nor has any government learned how to keep its hands off of markets or hell, just about any way possible to "make things fair" - and that's by and large what's screwing the whole program up; you cant blame a free market failing when tinkerings were the source of the peturbations to begin with, you cant say things arent fair when 1)nothing really is and 2)that which forces fairness upon some also forces unfairness upon others. That's really the heart of the issue when the situation comes about where someone who produces something own less and less of the process - we all know the best way to make the most of your money is to own the business, and all of that extra effort you've put into owning your own business entitles you to the fruits of your production. "Leveling the playing field" to a ridiculous extent merely incentivizes laziness.

 

Puh, the riots in greece! Entitlement spending gone wild. You fools cant pay for it all, now scale it back, simple as that! Many a country needs to do this because you cant just give it all away. Same as a cultivator/healer who heals and heals and gives all of his energy away constantly and doesnt do enough to keep up his own reserves - the inevitable result is that it is lost.

 

Hoarding guns isnt about shooting any "unworthies" that come along, although I'd imagine there's a sick bastard or two out there that subscribe to that notion - its more along the lines of: if the shit hits the fan and there is a descent into general lawlessness, invariably there are going to be criminals trying to extract resources in unscrupulous ways from unwilling victims. Like with martial arts, the idea is not to be a victim. Protect yourself properly and responsibly and you are a million times less likely to be a victim.

 

Either way, the idea is: you are responsible for yourself. Dont bitch if you do not acknowledge the responsibility and are left behind/lesser as a result. "Forced charity" is theft.

[TzuJanLi]

Greetings..

 

Either way, the idea is: you are responsible for yourself. Dont bitch if you do not acknowledge the responsibility and are left behind/lesser as a result. "Forced charity" is theft.

When a parent can't feed their children, for whatever reason, they will accept charity or resort to less desirable means.. you can give it away charitably, or have taken away forcibly, either way.. nature will balance the equation..

 

Be well..

[ralis]

Amusing how "the new deal II" policies are making the economy and the stock market behave...just like they did during the great depression. Who'da thunk??

 

Has the world learned its lesson on entitlement spending yet? I doubt it. Nor has any government learned how to keep its hands off of markets or hell, just about any way possible to "make things fair" - and that's by and large what's screwing the whole program up; you cant blame a free market failing when tinkerings were the source of the peturbations to begin with, you cant say things arent fair when 1)nothing really is and 2)that which forces fairness upon some also forces unfairness upon others. That's really the heart of the issue when the situation comes about where someone who produces something own less and less of the process - we all know the best way to make the most of your money is to own the business, and all of that extra effort you've put into owning your own business entitles you to the fruits of your production. "Leveling the playing field" to a ridiculous extent merely incentivizes laziness.

 

Puh, the riots in greece! Entitlement spending gone wild. You fools cant pay for it all, now scale it back, simple as that! Many a country needs to do this because you cant just give it all away. Same as a cultivator/healer who heals and heals and gives all of his energy away constantly and doesnt do enough to keep up his own reserves - the inevitable result is that it is lost.

 

Hoarding guns isnt about shooting any "unworthies" that come along, although I'd imagine there's a sick bastard or two out there that subscribe to that notion - its more along the lines of: if the shit hits the fan and there is a descent into general lawlessness, invariably there are going to be criminals trying to extract resources in unscrupulous ways from unwilling victims. Like with martial arts, the idea is not to be a victim. Protect yourself properly and responsibly and you are a million times less likely to be a victim.

 

Either way, the idea is: you are responsible for yourself. Dont bitch if you do not acknowledge the responsibility and are left behind/lesser as a result. "Forced charity" is theft.

 

 

One of the reasons for the current economic crisis is the passage of the Gramm-Leach-Bliley Act of 1999. This Republican law gutted the Glass Steagall Act. Glass Steagall was enacted during the depression to keep separate, banks and investment houses. What that entails is, banks are no longer just ordinary banks, and now are able to invest everyone's money in high risk derivatives, credit default swaps, hedge funds and selling mortgages. These high risk bets are backed (insured) by AIG which caused it's et al demise during the Bush years. Further, companies such as Goldman Sachs are also classified as banks and investment houses. Goldman is able to borrow unlimited money from the Fed at 0% interest and invest in derivatives and other high frequency trades, which essentially is predatory for the reason that they know who is buying and selling (insider trading) and are therefor are able to undercut (naked short selling) all competition.

 

Hedge Funds are the problem for the EU countries in that these type of predatory companies engage in (naked short selling) against small countries debt. This practice can bankrupt countries (Greece).

 

OK Joe, I have given a brief factual description of corporations out of control and associated problems. However, you blame entitlements on the problem. That is a Republican talking point that has no basis in fact. What I briefly posted can be researched by anyone to verify as fact. Further, my Republican brother blamed poor people buying houses through Fanny and Freddie (Republican talking points) as the cause of the mortgage crises. The losses from the crises were approximately 780M. However, the derivatives (high risk bets) in which these mortgages were bundled and insured (AIG) are valued at around 2 Trillion. Therefor, it was the banks that bundled these bets and bought and sold derivatives. Therefor, it was the banks that caused their own demise. Further, it was the Gramm-Leach-Bliley Act that made "too big to fail".

 

 

ralis

[mike1234]

Ralis FTW!

[RiverSnake]

It's difficult to predict the future. Should be interesting to see what happens.

[idquest]

Very interesting topic.

 

What exactly can lead to things getting that bad and how likley is it that these things can happen?

 

Ive heard about these kind of predictions, but I've not yet heard a detailed and realistic explanation of what could cause such a serious situation.

Countries and people living beyond their means - this is the reason.

The governments around the world are trying to maintain the living standards of the last 20 years which are unsustainable both demographically and environmentally in the long run. They are thrying to use a short-term 'painkiller' (large budget deficits) to reach their ends. The result is going to be many-fold 2008 meltdown because of that.

[ralis]

Countries and people living beyond their means - this is the reason.

The governments around the world are trying to maintain the living standards of the last 20 years which are unsustainable both demographically and environmentally in the long run. They are thrying to use a short-term 'painkiller' (large budget deficits) to reach their ends. The result is going to be many-fold 2008 meltdown because of that.

 

 

You address nothing around the corporate greed problem that I briefly addressed. The banking corporate problems must be addressed. Let's not forget the increased military spending for a standing army that is no longer needed!

[topflight]

Both the effective repeal of the Glass-Stegall act and the current insane deficit spending primarily on entitlement programs are both significant contributors to our current problems. If you want to understand how we got where we are and where we are going here are the best books.

 

Rich Dad's Conspiracy of the Rich: The 8 New Rules of Money by Robert T. Kiyosaki

http://www.amazon.com/Rich-Dads-Conspiracy-Rules-Money/dp/0446559806

(more middle of the road)

 

Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown by David Wiedemer et. al.

http://www.amazon.com/Aftershock-Protect-Yourself-Financial-Meltdown/dp/0470481560

(more extreme, take with a grain of salt)

 

The End of Prosperity: How Higher Taxes Will Doom the Economy--If We Let It Happen by Arthur B. Laffer et. al.

http://www.amazon.com/End-Prosperity-Higher-Economy-If-Happen/dp/1416592393

[Martial Development]

If you were thinking about making major purchases, Id advise against it, and instead buy certified gold bullion bars from a major gold exchange, or the ETF.

Its the USA where it will be kind of dangerous due to the social inequality and guns, I dont think here in Europe it will get too messy.

 

It is widely believed that the GLD ETF doesn't have the gold it is trading. It has only promises to deliver gold--over-leveraged promises that could never be fulfilled even in the best of times.

 

There are also credible rumors that many of the solid gold bars in trade, are actually gold-plated tungsten. So buyer beware!

[ralis]

Both the effective repeal of the Glass-Stegall act and the current insane deficit spending primarily on entitlement programs are both significant contributors to our current problems. If you want to understand how we got where we are and where we are going here are the best books.

 

Rich Dad's Conspiracy of the Rich: The 8 New Rules of Money by Robert T. Kiyosaki

http://www.amazon.com/Rich-Dads-Conspiracy-Rules-Money/dp/0446559806

(more middle of the road)

 

Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown by David Wiedemer et. al.

http://www.amazon.com/Aftershock-Protect-Yourself-Financial-Meltdown/dp/0470481560

(more extreme, take with a grain of salt)

 

The End of Prosperity: How Higher Taxes Will Doom the Economy--If We Let It Happen by Arthur B. Laffer et. al.

http://www.amazon.com/End-Prosperity-Higher-Economy-If-Happen/dp/1416592393

 

 

If tax cuts for the wealthy really had an effect, then the Bush era tax cuts (for the wealthy) would have created a vibrant economy with plenty of jobs. Instead the very wealthy (top 1%) used that money to create bubble economies i.e, stock market, oil futures (150.00/ barrel) hedge funds and private equity firms etc. There was no net increase in jobs during the Bush era! This propaganda started with Reagan's trickle down theory of economics.

 

Some of you that post here do nothing more than listen to propaganda and believe it. Propaganda is not real journalism.

 

The U.S. basically produces very little in real goods (real wealth). Instead the jobs are sent to China where junk is produced for pennies and sold here at outrageous profit. The corporations are rewarded with tax cuts to behave in this manner. Also the small or lack of tariffs imposed on Chinese goods that are exported to the U.S. causes very large trade deficits.

 

 

ralis

Edited July 6, 2010 by ralis

[joeblast]

Greetings..

 

 

When a parent can't feed their children, for whatever reason, they will accept charity or resort to less desirable means.. you can give it away charitably, or have taken away forcibly, either way.. nature will balance the equation..

 

Be well..

So its perfectly okay to have my money and possessions raided by someone "because they need it?" And what if I forcibly protect my assets, because they, being mine, "are needed?" That doesnt change the equation on iota - forced charity is theft. If I give it away freely, *that* is charity. If it is taken from me by force without consent, that is theft. Or taxes, many of which border on theft anyway. That doesnt address or really justify a starving man committing theft, he can be arrested for it just the same. There's soup kitchens and stuff, so...more substantive argument required.

 

One of the reasons for the current economic crisis is the passage of the Gramm-Leach-Bliley Act of 1999. This Republican law gutted the Glass Steagall Act. Glass Steagall was enacted during the depression to keep separate, banks and investment houses. What that entails is, banks are no longer just ordinary banks, and now are able to invest everyone's money in high risk derivatives, credit default swaps, hedge funds and selling mortgages. These high risk bets are backed (insured) by AIG which caused it's et al demise during the Bush years. Further, companies such as Goldman Sachs are also classified as banks and investment houses. Goldman is able to borrow unlimited money from the Fed at 0% interest and invest in derivatives and other high frequency trades, which essentially is predatory for the reason that they know who is buying and selling (insider trading) and are therefor are able to undercut (naked short selling) all competition.

 

Hedge Funds are the problem for the EU countries in that these type of predatory companies engage in (naked short selling) against small countries debt. This practice can bankrupt countries (Greece).

 

OK Joe, I have given a brief factual description of corporations out of control and associated problems. However, you blame entitlements on the problem. That is a Republican talking point that has no basis in fact. What I briefly posted can be researched by anyone to verify as fact. Further, my Republican brother blamed poor people buying houses through Fanny and Freddie (Republican talking points) as the cause of the mortgage crises. The losses from the crises were approximately 780M. However, the derivatives (high risk bets) in which these mortgages were bundled and insured (AIG) are valued at around 2 Trillion. Therefor, it was the banks that bundled these bets and bought and sold derivatives. Therefor, it was the banks that caused their own demise. Further, it was the Gramm-Leach-Bliley Act that made "too big to fail".

 

 

ralis

Key words there: one of the reasons. You cant simply state one of myriad reasons and then go on with your diatribe as if that reason was singular. Fact of the matter is, before you go tossing R&D into the mix, it was Bubba who signed the GLB act into law:

"I don't see that signing that bill had anything to do with the current crisis. Indeed, one of the things that has helped stabilize the current situation as much as it has is the purchase of Merrill Lynch by Bank of America, which was much smoother than it would have been if I hadn't signed that bill.... On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I'd be glad to look at the evidence."

-Bill Clinton

 

How about the lack of Glass Steagal equivalent in Europe? Didnt seem to keep them sheltered.

 

Or some of the things that this bill allowed to happen (even though a bunch of it was already taking place) were the entities that wound up being most diversified (i.e. JP Morgan) survived this the best, while the least diversified (i.e. Lehman) fared the worst?

 

Wait, wasnt this whole diversification thing painted as bad? That some banks acted like college freshmen (who never drank before) attending a frat party doesnt make for a "broken system." Nor is it the one thing that did it.

 

If anything, the data backs up you being angry with the Federal Reserve - and I'm right on board with Ron Paul - the fed needs to be audited - fully and completely.

 

Remember the Community Reinvestment Act?

-----

The Community Reinvestment Act is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound banking operations...

----

So here we have a law, intended to prevent "discrimination"...

 

and its end result was the government arm-twisting lenders into giving money to borrowers who would never have met actuarial muster. Who determines CRA compliance? The Federal Reserve.

 

A closer look at the failures of the CRA:

http://www.businessinsider.com/the-cra-debate-a-users-guide-2009-6

 

"In short, the lax lending standards created in response to the CRA had dug a pit that was waiting to get filled when the circumstances were right."

 

 

As to "corporations out of control"...like an organism; stimulus, response. (No, not "government stimulus" package giveaways.) The landscape is always changing, new technologies emerging, new ideas and ways of doing business are such a key component of the world that the entities who do not embrace it are almost surely not going to last long at all.

 

What you are missing is that the entire reason this evolved as it did was because of lax lending standards, enforced by the government - until it got to the point where unsound investments so far outpaced the sound ones that a real systemic issue began to emerge.

 

Stimulus, response. I jab my buddy in the ribs, I can expect a jab back at some point. Tax the shit out of something, you have less of it. Do everything and cater endlessly to your child and you raise one lazy sonofabitch. Government displays no qualms about haphazardly changing rules, businesses hold on to their money instead of investing it wondering what's the next change. There's a million ways you can put it.

 

The emergence of MBSes and CDOs were in response to regulations that didnt fit the way business was evolving. That's part of the problem with overregulation, sometimes the more creative ways to get around it wind up being worse than if you didnt have the regulatory restriction in the first place!

 

Your refrain is "those f'n corporations" - its like saying "those f'n people"...they're just evil, nevermind they are players in a game.

 

 

And quit referring to "tax cuts for the rich" when it was an equal, flat decrease across the board. To characterize it any other way is dishonest at best.

 

Ralis FTW!

one rebuttal in a debate decides it?

[Brian]

...

[gendao]

Great posts idquest, topflight, A Seeker, joeblast & ralis. Except..

The U.S. basically produces very little in real goods (real wealth). Instead the jobs are sent to China where junk is produced for pennies and sold here at outrageous profit. The corporations are rewarded with tax cuts to behave in this manner. Also the small or lack of tariffs imposed on Chinese goods that are exported to the U.S. causes very large trade deficits.

China values intelligent beta males and a hard work ethic. As a result, they simply produce greater VALUE (more results at lower cost) than we do here now. That is the BOTTOM LINE that liberals are loathe to admit. Because they don't want to face up to the hard fact that they've enabled an underachieving society full of Bart Simpsons now.

 

They also don't want to admit that Chinese industry is also more efficient because it isn't excessively burdened with "alpha thug" subsidies like the Communist Reinvestment Act, select group-based affirmative action, unions, Bailouts, etc. All government entitlement programs that reward incompetence and punish competence. Well guess what folks - you keep rewarding failure - and that's what you'll get.

 

I know a girl that got hired by an American company and then almost immediately went on a long maternity leave (she didn't tell them she was preggo when she hired on, either). Feminists laud this as progress - but how less competitive does this also make a company? There's 2 sides to every coin...

 

Yet, there has not even been any discussion about removing any of these FAIL enablers during this entire meltdown! Instead, we delude ourselves that the answers are financial shell games like "bailouts" and "spending ourselves out of debt." Because many Americans still want something for nothing. They don't want to make the hard sacrifices - so will force our children to.. They will be the ones who get all their Social Security cut, benefits cut, services cut & taxes raised to pay off our debts as America degenerates into a 3rd World slum in many areas.

 

So instead of blaming China for outperforming us - we should be modelling their capitalist success factors. Again - working hard & smart. LIVING WITHIN YOUR MEANS - NOT CREDIT/DEBT. Nose to the grindstone. That is the only way out of an economic black hole. That is the way China is slowly digging itself out of decades of Communist-induced poverty (along with population control). And it is the way America used to be before LBJ's "Great Society" welfare state kicked in...creating a legacy of self-entitled slackers on the dole.

Edited July 6, 2010 by vortex

[TzuJanLi]

Greetings..

 

That doesnt address or really justify a starving man committing theft, he can be arrested for it just the same. There's soup kitchens and stuff, so...more substantive argument required.

There's no justification intended, no further 'arguement required'.. there won't be enough 'soup kitchens' for the 'big one'.. i'm simply explaining what will happen, history has foretold this scenario many times..

 

Be well..

[Brian]

...

[joeblast]

Greetings..

 

 

There's no justification intended, no further 'arguement required'.. there won't be enough 'soup kitchens' for the 'big one'.. i'm simply explaining what will happen, history has foretold this scenario many times..

 

Be well..

Then there should be no need for me to make an argument for my weapons cache?

 

 

 

 

Seeker, regarding companies going overseas - look at laws, taxes, and tariffs...companies wont just go there because wages are cheaper!

[Brian]

...

[Brian]

...

[gendao]

Seeker, regarding companies going overseas - look at laws, taxes, and tariffs...companies wont just go there because wages are cheaper!

A friend with experience in the industry told me that companies would get stuff made in China or Mexico for something like 1/10-1/8 the cost of here (several years ago)...basically slap a label on it...and then resell it here at full cost. So no, import laws and such are just a drop in the bucket compared to the majority of the savings in pure production overseas.

 

Although, this amount has of course been steadily decreasing over time...but is still nowhere near parity. In all of our liberal tinkering to make work more "rewarding" & guaranteed for everyone regardless of qualifications - they neglected its main goal & lifeblood - competitive performance.

 

Imagine if liberals ran our pro sports and Olympic teams? Sure, everyone would get to play...but we'd also never get another gold medal again...while we just blamed all our failures on "bad calls."

Edited July 6, 2010 by vortex