^^ Markets fluctuate, water's wet, and so on. Did you gleefully post here when the Dow broke 14,000 in July? I thought not.

11/8/2007 12:42:17 AM

Quote :

"And what does this mean for consumers? Goods coming from China aren't as cheap any more? Cars coming from Japan aren't as cheap any more?"

Nope. To the shock of International Political Economy Professors the world over, it turns out that an economy that is sufficiently large is largely immune to weak exchange rate induced inflation. "Why" is a good question that thousands of PhD students in Economics will try to answer over the next decade, but here is my answer:
All manufacturers selling into the U.S. market from overseas (Europe) face competition from either domestic manufacturers or other companies whose exchange rate has not changed (Mexico). As such, when the dollar falls, the foreign competitors cannot raise retail prices without losing market share to these competitors. As such, when the exchange rate shifts these manufacturers are opting to sacrifice profitability in order to remain price competitive in the U.S. market.

Now, most any company should be happy to lose market share if the alternative is losing money. This leaves three explanations. First, if the exchange rate immune producers are boosting production at the same rate as exchange rate sensitive producers cut production then prices will remain flat (more cars from Mexico, fewer from Britain). Second, perhaps exchange rate sensitive companies would lose even more money by cutting production, perhaps by losing economies of scale. Third, if the exchange rate sensitive companies expect the weak dollar to be temporary then they do not wish to sacrifice their hard-won market share to save a few bucks today.

11/8/2007 12:44:34 AM

Quote :

"Markets fluctuate, water's wet, and so on. Did you gleefully post here when the Dow broke 14,000 in July? I thought not."

Yeah, you're right. Day after day of record setting oil prices and a 2.64% decrease in corporate capital will have absolutely no negative effect on the economy whatsoever.

(I added the face so that you'll be able to comprehend the overall meaning of my post).

Also, what has happened to the Dow since July? It seems to be down 700 points. I'm sure people were cheering in 2001 when the Dow was setting records back then too. But what goes up must come down...

11/8/2007 4:23:53 AM

^ . . .and go back up. It's called "fluctuation."

11/8/2007 4:44:18 AM

Must be really good today

So if the markets are up then all hail Lord Hooksaw and his apt posting of the stunning economy when none of us other hate America first moonbats would.
And if the market is down it's called "fluctuations". Gotcha.

11/8/2007 8:12:58 AM

^ hahahaha, its been so long since I've seen a "drank the kool-aide" reference.


Anyway, as has been proven multiple times in this forum, my economics is rusty but I do believe I'll trust this guy's opinion: http://tinyurl.com/24cxlz

Quote :

"Federal Reserve Chairman Ben Bernanke said Thursday that a host of economic problems, including the severe housing slump, will cause business growth to slow noticeably in coming months. Bernanke said he and his colleagues believe economic activity will "slow noticeably in the fourth quarter" compared to the 3.9% pace of the third quarter. "Growth was seen as remaining sluggish during the first part of next year, then strengthening as the effects of tighter credit and the housing correction begin to wane," Bernanke said in his prepared remarks to the JEC. Many economists believe the economy's maximum point of danger of falling into a recession will occur in the early part of next year."

I consider myself a realist, not a pessimist, so I don't think that this marks the beginning of a long slow decline of the United States as a world power, eventually disentegrating into a pile of Imperial Rubble, but it seems like we're in for a correction.

11/8/2007 12:03:24 PM

It is no risk suggesting that the current 3.9% growth rate will slow. My goodness, 3.9% is ungodly high, denoting an economic boom. Suggesting that it will slow down to mere economic prosperity is a rediculously optimistic prediction, historically speaking.

Lots of things must happen at once for there to be a recession. Right now we have none of them. The banks are losing some money, so what? They can write it out of their 30% profit margin from last year.

[Edited on November 8, 2007 at 2:33 PM. Reason : .,.]

11/8/2007 2:33:15 PM

^ And the Fed chairman's remarks from today back up your position.

Bernanke: Economy to see more reasonable growth pace

Quote :

"WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke said on Thursday that he expects the economy to recover to a 'more reasonable growth pace' by next spring. 'We have not calculated a probability of a recession and I would not want to offer that today,' Bernanke told the congressional Joint Economic Committee in answering questions after testifying before the panel [emphasis added]."

http://www.reuters.com/article/pressReleasesMolt/idUSWAT00841920071108

Quote :

"However, Bernanke also said that recent economic data releases 'suggest the overall economy remained resilient in recent months.'"

http://money.cnn.com/2007/11/08/news/economy/bernanke/?postversion=2007110814

[Edited on November 8, 2007 at 2:59 PM. Reason : .]

11/8/2007 2:56:20 PM

That statement seems to imply that he does see a chance for one however. If he thought it was a few week dip he'd categorically deny it.

Though all the estimates I read said that we wouldn't really know until early next year if we were in an actual recession or not.

11/8/2007 2:58:40 PM

^ A recession around next spring would be at odds with the Fed's expectations.

Quote :

"Federal Reserve Chairman Ben Bernanke said on Thursday that he expects the economy to recover to a 'more reasonable growth pace' by next spring."

11/8/2007 3:00:53 PM

We'll see I suppose. Here's to hoping for the best.

11/8/2007 3:06:53 PM

^ Indeed.

11/8/2007 3:10:03 PM

Quote :

"There is something quite alarming on the recently released “Blue Magic” music video. The song, by the wildly successful rap artist and businessman Jay-Z, is on an album of songs accompanying/inspired by the Ridley Scott movie “American Gangster,” starring Denzel Washington and Russell Crow. But it wasn’t sex, drugs, violence or explicit language that shocked my conscience. It was the Euros. The Jay-Z video flashed large stacks of €500 Euros. When I start seeing rap stars flashing euros instead of U.S. dollars, I know our economy is in trouble. "

http://www.chaskaherald.com/node/3010/print

11/10/2007 11:41:01 PM

bwahahahah

11/11/2007 1:47:39 AM

Should we really be looking at rap stars to have any kind of sound financial judgment? I mean 24 inch gold plated spinning rims...really ain't that sound of an investment.

11/11/2007 1:54:10 AM

^ Well, gold is up 32.5% in the last year.

11/11/2007 11:55:16 AM

WHAT MORE CAN I SAAAYYYYY???

11/11/2007 12:01:06 PM

Gold has not even reached its record high yet (1980 I believe). And that is not taking into account all the inflation since then: the price of gold would need to double or even tripple again to set real highs.

[Edited on November 11, 2007 at 4:15 PM. Reason : .,.]

11/11/2007 4:15:03 PM

Jesus fucking christ I cant listen to one more person use the "dollar is weakening" argument.

You are the same idiots who whine about trade deficits. Which one is it that is actually about to ruin our lives? Is it both???? Because that wouldn't make any sense you dolts.

In reality, its neither. Worry about this shit when people stop wanting what we make and have. Do you really think as these other nations begin to prosper they will want less pharmaceuticals? Are people really going to stop visiting NYC, Hollywood, Disneyworld as it becomes cheaper?

Do you really think EVERYONE wants to invest in developing markets? Which economy offers a safer long term, growth oriented investment? Is it China? Really?

11/11/2007 6:36:55 PM

Quote :

"Worry about this shit when people stop wanting what we make and have."

That...is...what...we...are...worried...about.

Not so much the make, but the have.

[Edited on November 12, 2007 at 7:08 AM. Reason : /]

11/12/2007 7:05:53 AM

I just think with US manufacturing practically at all time highs it might be the wrong time to play the sky is falling card.

11/12/2007 7:38:54 AM

Our country as a whole told manufacturers to "go f*** yourselves" a long time ago. Our country is more dependent on financial companies for profits, companies that create nothing except stick people with debt and then they make money off the debt.

We used to have a motto of "What is good for General Motors, is good for America."

The motto now is "What is good for Goldman Sachs, is good for America."

Note: I proudly work for an American-based manufacturer.

11/12/2007 8:31:31 AM

Yeah. Raw numbers might back that up, but as a percentage of GDP, manufacturing is not at an all time high. What does this mean? I have no idea, but it's easy to pick one set of data and use it while completely ignoring another set.

11/12/2007 9:19:18 AM

Who the fuck cares what percentage manufacturing is at? Times change. More profitable industries have emerged. Are you next going to complain about how stovepipe hat making has declined?

11/12/2007 9:24:07 AM

^ I was merely pointing out that the % of GDP that is attributed to actual physical goods coming from the country is lower than it has historically been. Perhaps you would like to take a few moments to go back and read the last page of discussion about the importance of manufacturing/service balance before you post irrelevant, asshat comments such as your last post.

11/12/2007 9:42:31 AM

manufacturing/service balance? What does that even mean? Manufacturing as a % of GDP is down for every industrialized country in the world. Shit, manufacturing employment is even down in China. The fact is consumers do not want "stuff" anymore; we want internet services, movies, television, fancy software, fun games, etc. etc. Just look at the latest console wars: the physical hardware is usually sold at a loss! (Wii being the exception) All the money is made by licensing and selling the software!

If you want to blame someone for the decline of manufacturing then blame fickle consumers for only wanting 7.6 cars per capita because that eighth car would cut into their PS3 or iPhone budget.

11/12/2007 11:22:45 AM

If you want to create more manufacturing jobs just get rid of the minimum wage and tell people they can have jobs assuming they are willing to work for $1/hr.

Otherwise tell them to grow the fuck up and get a job that pays the bills.

I shouldn't have to supplement someones salary with my tax money just because they want to do a job thats a drain on society.

11/12/2007 7:36:46 PM

^
Are you anti-American? Because the mixed economic system we have has made us the greatest country on earth. If you are against the system our country is predicated on (free market with a social safety net) and you would rather see us devolve into a anarchic third world country (like Somalia) than you obviously do not understand a single thing about what you are advocating, are completely irrational, or have been so conditioned by drinking the "free market" kool-aid that you cannot see that our system of government has been the impetus for our success.



[Edited on November 12, 2007 at 8:45 PM. Reason : .]

11/12/2007 8:43:55 PM

Sentiment at a 2 year low

http://tinyurl.com/2sa5dv

11/12/2007 9:06:37 PM

Ok, rallyduram is mistaken. At today's productivity rates $1/hour is not a plausible salary for anyone, except maybe an illegal brain-damaged child.

But is Scuba Steve being sarcastic? I know of no mechanism that not having a "social safety net" would hurt productivity. It is unclear whether those that need it today would even be harmed since charity would no doubt expand to replace the void left by a shrinking government. Are you suggesting workers would rather starve than work without unemployment insurance?

You could argue Keynes was right and that without government spending the economy would be less stable, but a "social safety net" and "government spending" are not the same thing, never mind that you would need to ignore the last 60 years of economic history.

It is the American people that make America successful. It is their hard work, willingness to take risks, and ingenuity that makes them prosper. In so far as the government has made it possible it was by securing domestic free markets and the rule of law, just as in every other wealthy country.

[Edited on November 12, 2007 at 10:02 PM. Reason : typo - thanks for the catch]

11/12/2007 9:47:08 PM

Quote :

"It is the American people that make America successful. It is their hard work, willingness to take risks, and enginuity that makes us prosper. In-so-far as the government has made it possible it was by securing domestic free markets and the rule of law, just as in every other wealthy country."

Ingenuity? What a dunce... [/hooksaw debate method]

P.S. I'm sorry I don't have anything to really contribute to this thread right now. I'm also sorry I don't have a picture of a troll doll bookmarked.

11/12/2007 9:58:07 PM

Quote :

"I know of no mechanism that not having a "social safety net" would hurt productivity"

Not just a social safety net, but also a business safety net exists. Thousands of businesses go under each day, but you don't see the US full of debtor's prisons. The government assumes much of the risk that allows business to thrive. Government investment is also a major driver of technology and innovation.

[Edited on November 12, 2007 at 10:24 PM. Reason : .]

11/12/2007 10:23:55 PM

Quote :

"Thousands of businesses go under each day, but you don't see the US full of debtor's prisons. The government assumes much of the risk that allows business to thrive"

My. God. You have no idea what you are talking about, do you? Government granted limited liability for corporations is not assuming the risk of anything: it is dumping all the risk on the American people (would-be plaintiffs). This was an unholy bargain struck long ago: corporations would pay taxes at a time when income taxes were unheard of in exchange for free liability insurance.

This does not allow America to prosper; it allows corporations to get away with murder. It did not and would not hamper productivity if Corporations were forced to pay for their own liability insurance just as all other businesses do. What it would do is make sure someone, in this case the insurer, was making sure the mines in Colorado were not poisoning the drinking water, oil tankers were not capitained by drunks, and Texas refineries were not using 40 year old safety equipment.

This is not to say that accidents would not happen, but at least then someone would pay for the damage done, rather than ruining people's lives, declaring bankruptcy, and getting away scott-free.

[Edited on November 12, 2007 at 11:03 PM. Reason : ,.,]

11/12/2007 11:01:55 PM

^ I think it's more likely that the private insurers would work harder to conceal or bury egregious acts, than somehow magically make corporations more responsible.

11/12/2007 11:17:59 PM

We need more corporation-regulated corporations.

11/12/2007 11:36:11 PM

^^^ I would stick to Computer Engineering if I were you. Just because I don't make your exact argument doesn't mean I don't know what I'm talking about.

[Edited on November 13, 2007 at 12:00 AM. Reason : .]

11/12/2007 11:50:48 PM

Quote :

"I think it's more likely that the private insurers would work harder to conceal or bury egregious acts, than somehow magically make corporations more responsible."

Of course they will. But often the cheapest way to bury an egregious act is to not commit it in the first place. But, like I said, even if there is no impact what-so-ever upon the behavior of corporations, at least then the burden of negative results would not fall upon innocent third parties that either had their home blown away by a reckless refinery owner or lost their entire herd of cattle to heavy metal poisoning from a nearby abandoned mine.

Quote :

"Just because I don't make your exact argument doesn't mean I don't know what I'm talking about."

But you did not make any argument. You merely stated as if it was fact that "the government assumes much of the risk of corporations" (which happens to be false: the risk is being shifted to innocent third parties) and that somehow allows business to thrive. No reasoning, just an outrageous statement that desperately begs explanation. I appologize for the "know nothing" statement, now please explain the steps you followed to conclude the economy would collapse without free liability protection for corporations? Many industries are dominated by non-corporations, they don't seem to find it impossible to afford liability insurance, why is it disasterous to ask Microsoft to pay for it too?

[Edited on November 13, 2007 at 12:26 AM. Reason : .,.]

11/13/2007 12:23:00 AM

Quote :

""the government assumes much of the risk of corporations""

I didn't use the word corporation once in my statement btw. Economic interests do seek concentrated benefits while diffusing the costs across the entire population. My comments were more directed towards small business and I do agree that some corporations abuse these programs.

But if you think all the industries that would have collapsed without bailouts, it really isn't that surprising. One drought could decimate agriculture irreparably. Airlines would have closed long ago. Banks only have stability now because of the FDIC. The Fed pumps $50 Billion in liquidity into the markets to help ease the credit crunch and mortgage defaults lest we slip into a full depression. Not that I'm a fan of corporate welfare, but we would have a pretty shitty situation going without all these different industries. Its not fair from a free market perspective, but without the subsidy they are given, we wouldn't have the framework on which everything else operates.

[Edited on November 13, 2007 at 12:47 AM. Reason : .]

11/13/2007 12:46:35 AM

Great, now I have real data to chew on:
"One drought could decimate agriculture irreparably."
Odd sentiment: farms go bankrupt all the time and these small businesses do not have liability protections, so the family loses everything and must start from scratch

"Airlines would have closed long ago."
What country do you live in? Airlines close down all the time. Remember PanAm? Follow the link for a list of 230 defunct airlines just in America. The airlines have only been bailed out once, after 9/11. And it is not like we would not have airlines if they did not, as the planes would still exist, and someone would buy them up firesale and go to work making a profit.
http://en.wikipedia.org/wiki/List_of_defunct_airlines#.C2.A0United_States

"Banks only have stability now because of the FDIC."
As I explained earlier, not all rich countries have an FDIC, and those that do often have the coverage so small as to be almost irrelevant (Great Britain, for example). The FDIC is a product of our history of bank failures during the Great Depression, a history few other countries experienced.

"The Fed pumps $50 Billion in liquidity into the markets to help ease the credit crunch and mortgage defaults lest we slip into a full depression."
But, again, while this is regulation it is NOT the government assuming any risk. The government is buying and selling its own risk-free debt. It is a form of regulation, yes. It helps us be rich, yes. But without it we would still be rich, we would merely experience a larger degree of instability. To 'slip' into a depression requires an assertive effort on behalf of government to inject either currency or regime uncertainty.

Quote :

"but without the subsidy they are given, we wouldn't have the framework on which everything else operates."

Okay, not only do you wildly exagerate what the government does do, you skipped the explanation as to why what it does is necessary. You are demonstrating a lack of familiarity with economic principles. As long as people are willing to pay more to fly than it costs then we will have plenty of airlines. Why they fall into hard times is not because people are unwilling to pay enough to cover the costs but because there is too much competition between airlines for too few passengers. The solution is for one firm to go away. Less competition would mean higher prices and no need for subsidy. In fact, a subsidy to one firm or group of firms will make things worse by keeping the less competitive firms around at the risk of shutting down more competitive firms, which lacked political favor and thus subsidy.

11/13/2007 1:18:39 AM

Quote :

"The fact is consumers do not want "stuff" anymore"

no to nitpick or get into semantics, but the point is that production of "stuff" becomes highly commoditized as nations/societies reach advanced stages of industrialization.

we never want less stuff, just stuff becomes easier to make and get, therefore the production of it becomes less a % of GDP.

this is a generalization, and and for times sake, i'm not going to bring up the commodity cycles and currency cycles and how they play into mfg., exports, etc.

11/13/2007 10:17:17 AM

I did overstate the issue; but as wealth has increased our demand for "stuff" has not kept pace with our ability to produce it. The fact that how we produce and distribute stuff has also fundamentally changed does not negate this long term trend.

11/13/2007 10:57:10 AM

Quote :

". . .[President Bush] believes there are strains to the economy and he said two different philosophies are being played out to deal with economic problems. 'My philosophy is that the American people know how to spend their money better than the government can,' [President Bush] said. 'They believe in a federal solution to every problem,' he said, referring to congressional leaders. 'And somehow, that solution always seems to include raising your taxes.'"

http://www.news-tribune.net/cnhi/newstribune/homepage/local_story_317161711.html?keyword=leadpicturestory

Amen.

11/13/2007 11:10:34 PM

http://www.cnn.com/2007/POLITICS/11/13/hidden.war.costs/index.html

Bush to America

Nigga please, just put that shit on layaway yo.

11/13/2007 11:13:12 PM

http://www.msnbc.msn.com/id/21774024/

I don't care if you think the economy is going strong or not... this is just terrible, terrible news.

11/13/2007 11:24:52 PM

"Accentuate the Positive"

http://youtube.com/watch?v=AvS8IOV1XqQ

11/13/2007 11:58:46 PM

IMStoned420, you must remember these are people that otherwise would not have had a home at all. As such, foreclosure is not a big deal: they are just back where they started. Would you have preferred all 2.3 million subprime borrowers be refused a loan in the first place if it would spare 300 thousand being foreclosed later?

In hind sight the banks sure would prefer they had not made any of the 2.3 million loans, but they did, and it will hurt them. But they would not be the only corporations posting huge losses this year.

Similarly, why is it a terrible thing for home prices to fall $5k? Sure, it hurts sellers and makes it difficult to clean up the mortgage mess. But it helps buyers, and since the U.S. population is growing there are more buyers than sellers (obviously excluding home builders, but they can get jobs in other industries).

Home prices were inflated; they need to come down. As such, falling home prices are a sign of returning rationality, clearly not terrible news.

11/14/2007 12:41:08 AM

^ You seem like a smart guy. You must realize that this is basically $223 billion that is going to vanish from the US economy. The houses will still be there, but no one is going to be buying them for a long time. I don't really care if people are losing their houses because they're stupid for getting into that situation in the first place. But the economic value that is being lost cannot be overlooked.

That, plus GM is posting a $37 billion 3rd quarter loss? That's a quarter trillion dollars that is being lost. I know the economy is resilient, but how much can it really take before we hit recession? I feel like I do a decent job of viewing this objectively (because who wants a bad economy, right?) and it just seems like there is a lot of money being lost right now. There's no getting around that.

^^ What in the hell does that have to do with anything?

[Edited on November 14, 2007 at 10:38 AM. Reason : hooksaw... sigh]

11/14/2007 10:36:43 AM

Quote :

"You must realize that this is basically $223 billion that is going to vanish from the US economy"

Absolutely not. That $223 billion has not been destroyed but merely transferred, as Gordon Gecko would say, from the money lenders to the people that sold the houses to subprime borrowers.

Now, in-so-far as this ordeal discourages lenders from making mutually advantageous loans in the future then real damage is being done to the economy. Specifically, sub-prime borrowers will never again get a mortgage at any interest rate, that is the damage. And that damage is un-quantifiable, in the long run it could be in the trillions for all we know.

But while a recession is possible it is not automatic. Back in the 80s during the Savings & Loan catastrophy bankers lost many trillions of dollars to the point that between 1987 and 1989 over 200 banks failed every year. Hell, in 1987 the stock market collapsed 33% in a single day. But it did not cause a recession because recessions are a product of the greater economy, not wallstreet. Recession finally did come years later in 1991 when no one expected. I almost believe that if you can predict a recession then it will not happen.

11/14/2007 11:02:53 AM

Quote :

"Specifically, sub-prime borrowers will never again get a mortgage at any interest rate, that is the damage. And that damage is un-quantifiable, in the long run it could be in the trillions for all we know."

How exactly is this damaging?

11/14/2007 11:15:29 AM

I can spell it out if you like. In-so-far as most sub-prime borrowers do pay back the loan then bankers lose out on the profit they would have made on the loan, investors lose out on a good return, the borrowers lose out by not owning their own home, the sellers lose out by not selling the house.

All these people are damaged because they must then fall back on their second-best offers, which may not be anything at all.

Sure, the problem is that bankers do not know which sub-prime borrowers will pay back their loans, hence the high interest rate. But if the analysts in the back room could work out the pattern then maybe they could discern which ones will repay and just make those loans. But now I fear that bankers and investors have been pscycologically turned off to the whole ordeal, preferring to ignore future profit oportunities out of fear. I could be wrong, maybe they will just wait for the housing market to flatten out and reduce the turn-over risk, only the future will tell.

11/14/2007 12:04:35 PM