Did you loose your job recently? If not why have your spending habits changed? Here in Canada the dollar is still worth a dollar. Is it not that way in America? I can’t wrap my head around the “recession” and all of it’s quirks. It is unfortunate that we are so pulverised by the media into believing what they decide to publish at any given time. These comments are coming from a married man with two kids and a mortgage. The mortgage is the only “investment” I have. I actually feel richer given the current situation as I just got a $1/hour raise yesterday. Perhaps I may feel different if I had money in the stocks. I wish everyone could pretend that there is no “crisis” and then I think life would carry on as usual
Just some thoughts.
Good job on finding the dollar store for men. I wish I had on of those close to home.
Derek
Replies
I also live in Canada. In fact, the dollar is now worth about 80 cents. This is beginning to show up in the areas that directly affect us as woodworkers. Steel City tools are now about 15% more expensive than last year, as just one example. Ironically, I now find more bargains but they are at the expense of small enterprises that are attempting to clear inventory to balance the books, or just trying to raise cash to pay the monthly bills. I'm relatively certain that this applies to sectors other than woodworking.
In my estimation, bottom line, is that Canada is about 6 months behind what is happening in the US. I keep thinking that companies like GM, Chrysler and Ford will see no real economic advantage to keeping their plants in Canada for a variety of reasons. GM has already turned down $3B+ in loans from the Canadian government, while they lapped up the money offered by the US government. Ontario has a huge dependence upon the automotive sector (to the tune of hundreds of thousands of jobs) and the rest of the country, for the most part, economically represents the tail of the dog.
I don't mean to rain on your parade, but I must respectfully disagree with your rosy view of the world.
Regards,
Ron
Edited 2/6/2009 9:33 pm ET by RonInOttawa
"Perhaps I may feel different if I had money in the stocks." As a huge percentage of Baby Boomers have, not to mention people (like my husband) who are retired and expect to draw a certain income from their IRA's. When that fund loses 20%, 30%, 40% of it's value (or more), your monthly income takes a huge hit. Wealthy people who are living off of huge investment portfolios take the same hit.
In America, so many people have been spending at levels dictated by the supposed equity in their homes. When housing values go down 20%, after they've just take out yet another home equity loan, they can be upside-down in their position -- the house is worth less than they owe.
"I wish everyone could pretend that there is no "crisis" and then I think life would carry on as usual." Not when hundreds of thousands of people are newly unemployed.
This is no mirage, Derek. I have been only mildly concerned about the crisis until today. The numbers are now so much worse, I'm getting truly worried. If this thing goes on for more than a year, which is beginning to look quite possible, it's going to be pretty darned grim at our house.
forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
Edited 2/7/2009 1:34 am by forestgirl
FG , Truer words have seldom been heard .
As far as Derek's wish that we all " pretend there is no crisis " to get life to carry on as usual ,,, Derek may be poking fun at us while only knowing what he has heard and read through the bouswazeee (sp) media.
This is effecting a wide spectrum of the country and many business owners are now faced with a declining level of commerce , like were all dressed up and nowhere to go , and no extra money to go there either .
I remember in the early eighties building shut down and the related industry was off . But a person could go out there and get a job , there were jobs to get . The difference this time is housing after a 10 year record pace came to the end slowly the last 3 years the way I see it . And even the local hospital is laying off , most mfg is off and holding on by a thread because of declining orders .There are few jobs to get and more of us competing for them , the credit market being frozen for consumers largely while bailing out some banks makes little sense to this dumb American . folks losing the homes they have been in for many years becoming , laid off and homeless living at Wal Mart .
Hang in ther FG & Hubby,
and remember the road ahead is shorter then the one behind
dusty , nice shop , good house, lovely wife good son
3 cats take over payments
"...remember the road ahead is shorter then the one behind." I hope not too much shorter. ROFL!
Thanks, oldusty!forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
Mr. Maker of Boxes,
In my opinion it's called GREED. Starts with Wall Street and goes from there.
I also think we are in a World economy and the majority of Americans just can't seem to get their minds around that, starting in DC.
Regards,Bob @ Kidderville Acres
A Woodworkers mind should be the sharpest tool in the shop!
It is too bad that our society has become so dependant on money. It would be nice to see a lot more bartering going on. I suppose that it is pretty hard to trade the Hydro company a chest of drawers for a years worht of juice though.
I find it interesting how panic can spread through a nation so quickly. I am not denying that there is a problem in the Americas today but I find it hard to believe that the problem has to exist.
I would like to see Canada turn inward at this time. We have what we need here to become self sustaining. If the country would close up shop for a few years and keep to themselves I think we would be alright.
Random Thoughts.
I hope that you guys can get through this as it is deffinitly effecting you more than me.
Derek
The comment about panic spreading so quickly deserves some clarification - one of the reasons, besides the real market forces that are driving it, is the exceptionally rapid communication that takes place today that did not exist in previous times. The news media in America is trouble, at least from the standpoint of finances. This puts a great deal of pressure on them to publish stories that concentrate on the worst news spin they can come up with ("If it bleeds, it leads"), and they are businesses after all. So if "Economy in Shambles" sells a good deal more newspapers or gets higher Nielsen ratings than a more measured headline, that's what the headline will read.
The difficulty with this is related to Steve's post about the psychology of the situation. There's a very large majority of the population that are not in severe trouble, but they aren't spending either, and that creates a rapid downward spiral. Steve put it in more eloquent terms, but this effect is sometimes called "The Tragedy of The Commons", wherein what is good and intuitive for the individual (in this case, conserving as much cash as possible through reduced spending) is extremely bad for the common good, and ultimately extremely bad for the individuals.
I've had conversations with some that have relatively secure employment that are putting off minor expenditures "because everyone else is doing it". I've pointed out to them that they cannot save their way out of trouble. The only thing this does is prolong the inevitable, as all employment and income is ultimately related to spending. But the message is not popular in this environment.
"I would like to see Canada turn inward at this time. We have what we need here to become self sustaining. If the country would close up shop for a few years and keep to themselves I think we would be alright. "Recipe for disaster!This will lead to "If you don't buy from me, then I won't buy from you." Consequently Canadian businesses will not export, decrease production...........
"I would like to see Canada turn inward at this time. We have what we need here to become self sustaining. If the country would close up shop for a few years and keep to themselves I think we would be alright. "Uhmm lets see I think we tried that for the last 8 years. Hard to keep to yourself when this world is inextricably linked and as the saying goes, "No man stands by himself".
There are real issues. Most can run back to housing. We created an artificial buble. When congress started mandating that people without credit could get loans, the pump was primed for disaster. It finally burst and now we are going to put gasoline on it by taking a credit card out in the name of our grand children to pay for pork that won't do a dang thing. During the election the economy was talked down so much that people started to change habbits. Businessmen are constantly looking to possible future conditions and adjusting spending (jobs) accordingly. There were pretty good indications that the administration would be socialist in nature and they really started cutting back. Now we have a Prez that thinks if he just puts more on the credit card somehow the payments are going to go down and is looking to the very congress that created the mess to fix it somehow. It's amazing times. As someone who's been around for a while its tragic, but I have faith that we will overcome this as we did the Jimmy Carter years. Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
hey Bones ,
I think we have been all caught in the up swill of hub bub for the last ten years and have been spending as much or more then we make for some time .
Then when things went in the dump we had to cut back from the over spending , that's the rest of the story .
dusty
but I have faith that we will overcome this as we did the Jimmy Carter years.
bones, I agree with your post -- everything but the line above. We are in a vastly different scenario than with the Carter years (I always laugh when Carter criticizes a sitting President. It's so ironic coming from the only first-term, lame duck President the US has ever had). Personally, I believe the ground is moving beneath our feet and economic 'plate tectonics' are going to alter the global financial geography. If one considers all the factors in play with our current situation, there is every reason to be seriously concerned:
Budget deficit to exceed 1 trillion dollars. When and how will that be made up? Not in my lifetime, not in my children's, not likely even in my grandchildren's. Maybe never...
US national debt of over 10 trillion dollars. That's not money we have -- that's money we owe, in addition to the money we've already lost!
Trade deficit of 75 billion per annum. When the rest of the world is also in crisis there's little margin for improvement here -- especially if the dollar is strong, relative to other national currencies.
The collapse of the housing market, credit crisis and plummeting real estate values. The majority of U.S. wealth is in real estate and that value is a fraction of what it was. Add in the toxic debt due to foreclosure and it's pretty grim.
Banking industry and Wall street loses. The figures here are staggering. The Dow alone has lost 50% of its value -- 40 trillion dollars! We've lost every dollar gained from 1990 to 2008 -- think about that! Lehman Bros. is defunct, AIG is a fragment of its former self, BofA and Citicorp are teetering on collapse and Merril Lynch is just barely alive -- these are the largest banking entities in the world!
State budgetary crisis. The most populous states in the US are facing profound shortages -- billions of dollars each. How will this difference be made up? Taxes? Cutting services?
The Federal Reserve is exhausting itself trying to keep the economy from cardiac arrest. At some point, the only recourse is to print money. The current crisis is one of deflation, but the only way to fix that conundrum almost guarantees inflation will soar -- not in the near future, but watch out!
Job loss and unemployment -- currently at the highest level in 16 years and likely to get higher as the economy continues to contract. How will people on unemployment get by after the money runs out?
Health care crisis. Frankly, there is no money to fix this. Nor do I believe government mandates will solve anything. Health care in the US is expensively prohibitive, not because doctors and hospitals are overpaid but because malpractice insurance premiums are bankrupting the system. Case in point: the state of Nevada has a dearth of OB/GYN's because most have fled the state because they cannot afford the insurance. Health care reform must begin with tort reform.
An aging population. With boomers entering retirement, there is a great draw upon the equity of the nation due to both retirement funding and health care costs, as well as a less robust, less populated work force. Less workers, making less money to fund greater demands. Simply put: we will not be able to afford the fix to our predicament.
Energy. There's no real need to explain this one, but, another embargo, another constriction of supply and everyone's budget goes out the window.
Food shortages. Believe it or not, the US is facing severe food shortages due to drought, loss of arable land and a disintegration of the farming industry.
Things were bad before and during Carter, but our current situation resembles 1930 much more closely than it does 1980.
Actually, I could add to this list but it's not really necessary. Now, you may think I'm the ultimate pessimist -- I'm not -- but a failure to face and embrace the reality we're confronted with will only make the pain worse and more prolonged. In spite of all the gloom, I see a tremendous positive outcome to all of this -- if the American people will do it. Previously in our society, people were intimately involved in each other's lives. We cared about one another; we carried one another through personal adversity; we were our 'brother's keeper'. My hope is that we will return to what is truly valuable: family, friends, neighbors -- humanity, and taking care of one another. Maybe, just maybe, the biblical ethic found in "he who gathered little had no lack and he who gathered much had nothing left over" will carry us forward to a better day and a better society. But it can't come from government -- it has to come from our hearts. We HAVE TO change!
Edited 2/8/2009 12:08 am ET by pzaxtl Doggone perfectionism! I should learn to leave things well enough alone.
Edited 2/8/2009 12:08 am ET by pzaxtl
Edited 2/8/2009 12:09 am ET by pzaxtl
Edited 2/8/2009 12:10 am ET by pzaxtl
Edited 2/8/2009 12:13 am ET by pzaxtl
Awwww sheeeeeeeeeeeeeeeesh.
Does that mean we actually have to start making stuff in our woodshops!?
Regards,Bob @ Kidderville Acres
A Woodworkers mind should be the sharpest tool in the shop!
Awwww sheeeeeeeeeeeeeeeesh.
Does that mean we actually have to start making stuff in our woodshops!?
Now, Bob, what would give you that idea? The only reason I have a shop is to collect expensive tools and waste natural resources by turning it into sawdust. Good God, man! -- if I actually learned how to use them tools my wife would start giving me a 'honey-do' list. That will never work! I much prefer to be shiftless.
One of the big problems if we want to admit it or not is the so called free trade, and the relaxing of tariffs. I am sorry but we can not compete for building things with a country that has little or no environmental laws (that cost us a ton of money to live with) and that has a work force that can / will live on less money in a week then we have to pay for a day or even an hour depending on how cheep the country is. And we will not be able to bring them up to our level any time soon. That was a day dream. We are way to small, even adding in Canada and Europe and the little bit of Asia that lives on or close to the same level we in the US live, we are still out numbered by huge amounts. So if the economy is going to level out we are going to have to go down a lot more then they go up.
And the idea of letting them build things why we do the desk jobs is just nuts. First off their is little to a desk job that makes it impossible for me to send that over seas also. The other countries may be poor but that does not mean everyone in them is dumb or uneducated. So I can replace a lot of desk job types also. And on top of this the government was and is cutting huge amounts of money out of the high tech sector. Why did the US and Europe lead in tech? Because the governments wanted the tech and paid to have it developed. Things like in Europe the Concord, may not have made any money but the tech invented to build the thing made its way into other stuff.
In the US the Military and NASA were the big pushes on the high tech line. All of our cordless tools are direct descendents from that, as NASA and the military pushed the tech that gave us more powerful motors that used less electricity and batteries that held more power. The list here is endless with examples like this. Why is it that so much of our tech base came from the military and space? Because it is really expensive to invent and perfect this level of technology. So about the only one that can afford to do so is the government, and the military and the space race had need of it. So with the cut backs and to a degree the fact that we have let the spending of the military get out of control (see $400 hammers) we are not getting a lot of new tech. So we do not even supply this anymore. So what are we going to do for a living? It is cheaper to have almost anything built elsewhere, and shipped here. Even Japan is seeing this, and so is Korea, they are not as bad as we are, in part because they have newer plants and tools, and for other reasons, but the are getting to that point. I remember when model trains came from Japan, then From Korea, Then a few of them from Taiwan, now they come from China, and other cheaper locations.
It is nice to think we can compete on the world market but I do see it.
Doug Meyer
I meant next Jimmy by the fact at how he looks at the world. Cut spending on defense, negotiate with terrorists and never met a govt program he did not like. Looks awful familiar. If gov't spending could fix a recession, explain how cycles even exist. All the govt would need to do is spend. It doesn't work it never has. Only the public having confidence and small business making things to be avail to purchase gets things moving. Do you realize the govt could just stop collecting payroll taxes for a couple months and get a huge huge amount of cash instantly into the system. But then we would not be able to fix up all the govt buildings. You notice how they say we need to sacrifice, but there is never a program that suffers. They call a cut in expected increase a cut! Geez, it's Sunday and my Blood pressure is going up and I might say a few words I try hard to avoid. Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
for the past 2 years, I've been living on Social Security and a distribution from the earnings on my IRA. The end is in sight. There haven't been any earnings for a long time now and the IRA has taken such a hit, I hesitate to start liquidating stocks. Congress has suspended the mandatory withdrawl, but that doesn't make any difference if there's nothing left to withdraw :-(.
Living in Western Canada we have made billoions from oil royaltyies which have now dropped like a stone. The local GCs are finishing up the rush from a couple years ago but things have gone flat. We Just got our statements for RRSP and Registered education plan for the kids and they have all taken a big hit.
Layoffs unheard of here are happening!
I lay the blame on the long awaited kick in the back from NAFTA. It destroyed the manufacuting sector in Canada, the jobs were to flow south to the states or Mexico but they took a turn and went to China and India. So we have no infrastructure to rebuild even to serve out own markets.
We have been living frugal for years as paying back a debt for a business that died when the BSE crisis wiped out the cattle market. We don't have a 50 inch Plasma or a 50 thou entertainment room, the kids didn't get the latest and greatest playstation. Most of todays problems is the giagantic consumer market for the latest toys, and keeping up to the Jones's mentality. Does anyone really need a Hummer? or are they playing CSI?Best way to save money is quit fighting wars you will never win, and don't forget the long term costs associated with all the disabled veterns who's cost are there for a lifetime. Remember Vietnam ?
Does anyone with a degree in economics have to go back to school because what they were taught is in fact meaningless!!!!
We will plant a bigger garden make our own wine and drive the rusting chev. My mother taught us a "Depression Baby lifestyle" as she grew up in the 30's in the dustbowl, it has served us well.
why is every one so paranoid of inflation is is about the only way to pay for our wreckless ways of the past. It was the way our parents made money that we enjoy today.
Shoe ,
Interesting to hear a different version of how things really are in Canada.
We have been hearing a sugar coated version , there is nothing wrong hear we don't know why the U.S. is making all this up , yup , not here .
thanks for the rest of the story
regards dusty
You read one post from a Canadian living in an area of our country where the major industries are oil related, who agrees with the "doom & gloom" the US is experiencing & you think you have heard how it "really" is up here? If it gives you comfort, compared to the "sugar-coated" previous posts - whatever turns yer crank. Atlantic Canada has always been considered basically a "have not" area of the country (not as heavily industrialized) & obviously over the years we have learned to take a more conservative approach to living & make do with less. New home/condo/apartment construction is still growing & right now snow removal contrator's (summertime construction companies) are coining 'er! If you want some good reading try & find a copy of "Ten Lost Years" - kind of a documentary of the depression era in Canada. Most of the folks in rural areas up here didn't even know times were tougher! I realize this is now a global problem - just don't see much difference here, yet. Gotta go pack - heading for the Carribbean for a 7 day cruise (celebrating 40 years of marital bliss & financial difficulty), then spending a week in Dunedin FL (with our 80 cent dollars) & watch our poor, 'ol Toronto Blue Jays play the Yankees.
I have only spent a few holidays in B.C. so I have little knowledge of the inner workings of Canada ,it's true only parts of the truth are known by me .
So it sounds like some of the country is facing still strong or still good economical times while some of Canada is not , is that true ?
I know Canada is a very large exporter of lumber in fact probably the largest , I wonder who they will ship lumber to ? Certainly not the shipwrecked U.S. , perhaps the Canadian economy is so strong they will stop exporting and will need it all for themselves .
Tell us what industries are so strong and what is the unemployment rate ?
Even 20 years ago the economy in B.C. was hurting , service jobs paid little and food and fuel were through the roof then .The inflation rate and drug problems were also right up there as are in many places , Canada is not immune .
I am happy for you and other Canadians who have not felt the pinch , consider yourselves fortunate .
dusty
Anyone that thinks that the US economy can go into the tank and that Canada is going to be fine and dandy is not paying attention. First off how many Canadian workers work in the US directly or for a related US firm, or for a firm that supplies things to the US? Add in that the whole world economy is going down and that does not help either. Look around people sure the US is in a bad way, but the rest of the world is not doing well either. Keep in mind that even back in the 1920s the world economy was linked enough that the whole world went into a depression. Yes it took years to spread around the world but it did eventually get pretty much every where, that had an advanced economy at the time. The same thing is slowly happening this time. Pretty much all the European Car companies are in trouble maybe not as bad as Detroit but not doing well, and even the Japanese car companies are having issues. Give it some time, it will spread. Either that or somehow the US and the rest of us will figure out how to get out of this mess. I figure it will get worse before getting better.
Case in point I just was told that starting next week we are down to 30 hour work weeks. Why? two reasons lack of work is one of them, the other is that we are getting paid so slowly that the cash flow is an issue. We have enough outstanding debt in the company I work for to pay for all the payroll, insurance and rent for the next 4 to 6 months if people would pay us. But they are not so we are all taking a pay hit of 25% because the people that owe us, do not want to pay what they owe in a somewhat timely manor. This is the type of thing that will cause issues and effect others. For instance I was about to spend about $150 on supplies for a project, now, not so much. So that $150 will not be spend because I am not getting it because someone that we did work for is slow in paying. So that money effects the company I work for, it effects me, and it effects the company I was going to spend the money with. That is not counting any slowdown that caused the guy to not have it to pay us, and it does not count the fact that the $150 I was going to spend can not be spent by the company I was going to do business with. So in essence that simple $150 has had that impact on at least 3 people or companies and maybe a lot more. So it is almost like taking $450 out of the economy. This is why people sitting on money is not a good thing.
Oh well, maybe the great hope in Washington can figure something out. Meanwhile I guess once the weather gets better I will start my garden. It looks like I may need it.
Doug Meyer
(anyone need a Designer/Cad geek?)
Last month's newly unemployed figure for Canada was 129,000. That's double the U.S. figure as a percentage of the population. The economies of the manufacturing provinces, Quebec and Ontario, were heading for the toilet before the recession, and now they're in it. Ontario's largest sector was the auto industry. Alberta was in the middle of a boom due to the oilsands, but they're so expensive to develop that most projects are put on hold in tough times. End of boom. Other prairie provinces were doing well with commodities such as potash, but now nobody's buying. The lumber industry has been in decline for years, partly due to feuds with U.S. states over soft lumber exports. It's true that banks are in better shape because they were better regulated, and home repossessions are fewer because mortgages weren't given to bad risks, but the housing market is in decline. Many pension funds, including the government's, lost heavily on the stock market. Some, e.g. those of the big 3 auto companies, aren't sure to survive. If that sounds like good news...
Jim
So it sounds like some of the country is facing still strong or still good economical times while some of Canada is not , is that true ?
Yes. The tradition economic engines of Canada, which typically export to the united states are facing tough times. The manufacturing sector in Ontario seems to have been hit the hardest. The oil and gas industry in Alberta, is also facing some tough times. However it is coming out of a super heated bubble, and facing dumb taxes from a 'conservative?' premier (head of provincial government). The lumber industry in BC has been in trouble for years, no doubt aided by various softwood lumber tariffs into the US (which have been the object of many lawsuits). The BSE crisis took a toll on our cattle industry, and a recession isn't helping recovery.
Canada is not immune, but there are some key differences. Lower personal debt for instance. Our mortgage system did not allow for these 'toxic loans'. Our unemployment rates are similar, but then again our social programs are better. On the flip side, my home in Houston would probably cost half as much have twice the property and a pool... We pay more for gasoline. In general we pay more for goods, and of course we pay more in taxes...
Here in Alberta our construction industry is still going strong. The boom created a backlog of projects that are in progress or are 'shovel ready'. The oil and gas industry is 'okay', though there have been cuts in our Oil Sands projects.
So is the situation rosey? No. We're all in this together, and I suspect that we'll come out of it together as well.
piker ,,,
Congratulations on the 40 years , that in it self is a wonderful thing .
We just had our 25th , maybe by our 40th we will be able to go to the Caribbean too .
d
Why would you say economics learned a number of years ago has changed? Nothing has happened that is anywhere outside of the basics of economics analysis. When certain asset prices get above the replacement costs--like housing in some markets, it's been clear that won't last--it's true with housing just the same as it's true with tulips.
It's still true that when credit markets reduce spending incomes have to fall. It's also true that when income falls financial prudence for individuals and firms causes the spending to fall more, potentially in a downward spiral. Sure these always can "correct themselves" in the long-run, but as Keynes said in the thirties, "In the long run we are all dead." In otherwords we can't afford to wait for the "long run".
Sure people didn't understand the magnitude of the impact of the mortgage market on the rest of the financial system, in part because the data wasn't available because regulators had not focused enough on the issue to mandate the collection of the right information, but there are no new principles involved.
It's not a fun position to be in, is it? Best of luck. I think we all know this will turn around in time, but if the time is too long, it's going to be just awful.forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
It'll be a scary wait :-( I do have a fair little home business sharpening kitchen knives. Not much, but every little bit helps. I'm not that good a woodworker to sell anything except custom cabinets (not an artist) and we all know there isn't much of a market for that these days :-(
I'm a Canadian non-boomer and have not changed my spending habits much. Maybe I'm even buying more than before - everything is becoming more affordable (if only the dollar were worth more than the US!)
Chris @ www.flairwoodwork.spaces.live.com
(soon to be www.flairwoodworks.com)
- Success is not the key to happines. Happiness is the key to success. If you love what you are doing, you will be successful. - Albert Schweitzer
I hope things stay good for you.
Prospects for many of us are grim.
Best wishes.
................................................
Men will never be free until the last king is strangled with the entrails of the last priest.~ Denis Diderot
I hope so too. A friend told me that he'd be scared crapless if he were starting a business now, as I am. From my perspective, if I can get through this, I can get through anything. Fingers crossed...Cheers,Chris @ http://www.flairwoodwork.spaces.live.com(soon to be http://www.flairwoodworks.com)
- Success is not the key to happines. Happiness is the key to success. If you love what you are doing, you will be successful. - Albert Schweitzer
Thanks, Don. I've led a relatively charmed life to date -- not riches and fame, but no catastrophes either (other than living with the Wicked Witch of the West for the first 18 years, LOL). Will just have to keep movin' along and trust that things will get better.forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
FG,You might want to look into a reverse mortgage as a possible option. They are expensive and do require you turn your thinking around(ha!)but can also provide a solution.I can see Derek's point though, I've been wondering why the severity, because it sure looks like we are in for a big fall. However, while people have cut back on spending, its hard to imagine people had that much disposable income to cut back on that has caused the savage layoffs. In one sense it smells like the oil price run up ...
It's what economists call the "paradox of thrift". It's a rational decision for individuals to increase savings when the times look riskier. Pay down debt, build a cushion if possible. But when many do that the decline in demand for goods is meaningful, companies see sales fall, inventories rise. That leads them to cut production, which means people loss jobs, many more people fear for their jobs. And the decline worsens. Confidence has a huge role in this. In this, FDR was right, "we have nothing to fear but fear itself".
In outline here is what has happened: Things turn from slowdown to crisis when there is a dramatic event that makes a rapid alteration in confidence. We led up to such an event since many of the people worst affected by the slowdown were those that had recently borrowed money to buy homes, sometimes at very misleading terms. This increased the mortgage default rates. Normally, that would just put a little pressure on lenders, with defaults increasing a few percentage points. But, in this case, over the last decade, mortgage lending had been boosted by the ability to sell mortgages by putting them into very complex instruments called collateralized mortgage obligations, that slice and dice those pools of mortgages into supposedly tradable securities. The increase in defaults wasn't factored correctly (because of the complexity) into the mathematical models developed to price the securities and uncertainty as to the true value developed. This drove the prices on the few trades that occurred, leading to the devaluation of those assets on the books of the banks and investment banks that held them. Asset value provides the capital that lets those institutions lend. So lending dries up, and some of the lenders become insolvent both on the balance sheet (liabilities greater than assets) and in cash flow, since the earnings from lending, and the ability to convert assets to cash both decline. The failure of Lehman brothers, a large, reputable, investment bank really created fear that drove prices on debt obligations down, and exacerbated the problem in the financial system. When the financial system become paralyzed, companies fear for their ability to borrow and also have to cut back. A downward spiral becomes possible.
To stop the spiral, spending must be resumed so companies will have the confidence to stop laying people off, which in turn gives consumers confidence to resume spending. That's where government stimulus can play a role. I won't talk about specific stimulus programs government might use because that quickly becomes political. And, this thread is off to the cafe when that happens. Just suffice it to say, that recovery can be spurred without having to wring out debt from the economy the hard way.
Woodworking fits in a number of places. Lots of it--especially cabinet making --is related to construction, which being big ticket items heavily dependant on financing can suffer significantly. Custom furniture makers depend on rich people, many of whom aren't to rich anymore due to the markets, and the many of us who are hobbiests may feel constrained to spend less on their hobby.
Well said as usual Steve.
Tom.
Steve , Very well said .
What you say about custom furniture and cabinet business is mostly so.
Most that can afford these items are well healed folks that probably have some portfolio in the market that just got raped . The 62,000 a year now may have gone to 43,000 divide that by 12 months it certainly lowers the spending money even for the folks with dollars .
Some areas still foster a market level high enough to still be steadily moving along and some are about flat lined .
thanks Steve
dusty
Custom furniture makers depend on rich people, many of whom aren't too rich anymore due to the markets, and the many of us who are hobbiests may feel constrained to spend less on their hobby.
Steve
I fall in both of these categories but I have the luxury of a fairly secure job(I think) to work as I deal with the current market in my area.
Some of the wealthy clients that I have built pieces for over the last 20 years have usually come back for one piece each year. They tend to commit to me between Jan- Apr of each year and they give me a year to complete the work. This has been great as a "part-time pro" working with customers. The phone has not been ringing. Granted, many are looking at portfolios that are in the toilet but I feel they are "waiting to see" and not spending.
Hobby: making things for myself and family is a joy but something that also has a balance sheet. I am looking at my 5 year cycle(how I buy and dry wood). For me to replace the wood I bought on the 1st year of the last cycle I have to spend more than double what it cost me 5 years ago. The shipping/transportation is just nuts. To be fair, I have to pass that on to customers and think out what I am making for gifts. Its pricey now.
I am down to making 1 kentucky rifle at a time now. When it's sold, I start another. I have never done this in 25 years. Its different and I'm feelin' it.
There's lots of news and talking heads to debate the issues of greed and shady lending so I'll defer to them on that subject.
I see lots of hard working people with worry on their faces.
I'm teaching another 100 high schoolers this year and we do activities and projects that require 5.00 here and 10.00 there. Every time we plan, the phone rings with the parent asking if their child can go if they don't have the money right now. Its happened over the years but not like it is now. People don't have money.
later
dan
Steve,That is a nice synopsis of the situation. I find it particularly disturbing that the same thing happened 100 years ago and we passed a bunch of laws back then to prevent it from happening again...and those laws were rescinded in 1999. Ugh!I'm also the suspicious type, and while the housing bubble created a lot of capital for other expenditures, it just seems the downturn is a bit to severe to be supported by the housing crisis exclusively. When I see what is happening to peoples credit; credit lines being reduced, interest rates at 30%, cards being eliminated, it seems to me the tightening of the credit card industry is maybe having a larger impact on our GNP...and maybe they won't stop till Washington sends them some billions?
Steve,
I agree with much of what you say and disagree on some of the specific strategies and tactics. Putting aside the macro/micro aspects of this crisis, it occurs to me there is another reality that is not being discussed and, I believe, a much larger contributor to the problem. The reality is the financial system is run by people with lots of rules and the employees are fearful they are going to loose their jobs. I can't imagine any of them anxious to deliver to management bad news.....and that is causing a credit freeze. Sixty minutes showed many people in CA. with a buyer for their house but could not get the banks to agree in a timely fashion...the buyers walked away.
Also, my daughter(24 yrs old) missed one credit card payment and she was bounced up to 30% interest rate. That got her attention and the spending has stopped.When you think about it you realize it the young that have the high disposable income...and the credit cards.There was a great show last night on Frontline, inside the Meltdown. One could argue about the shows scope, however it validated for me a very strong message has been sent to the employees of our financial system...any toxic paper puts us out of business....yes, we still kill the messenger.
Hi, BG. We're pretty far from Reverse Mortgage desperation, but I understand the concept and how it can be good option for some.
It can seem like the layoffs are an over-reaction, but look at just two facts to get a feeling for how spending has dropped off: China is buying hardly any recyled cardboard, for the sole reason that they're not getting orders for goods that need to be shipped to us in boxes. The drop-off in these purchases was a sudden and precipitous one. The other sign is the fall in auto sales, not just US companies, but companies like Toyota and Honda. For states that have sales tax, that number can be looked at to get an idea of what the drop in spending is.
I never did hear what the final figures were for December retail sales, did you? In any case, Americans are simply not spending, for little stuff or big stuff. Part of it may be the credit crunch. Some of it is being scared, not feeling secure in our job situations. I know that in the Seattle area, for a long time people have been doing remodels and makeovers using the equity in their homes -- big, big purchasing went on there. That's slowed to a crawl with house values plummeting.
Consumer spending is such a huge percentage of our GDP, a decrease has a big impact. I just took a look at an LA Times article, January 31, indicates that Big-ticket items (appliances, cars, furniture) dropped 22.7%, part of the 3.5% fall in consumer spending. I'm not sure what they're referring to when they say "final sales dropped 5.1%" but whatever, none of this is good.forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
Forestgirl,"China is buying hardly any recycled cardboard, for the sole reason that they're not getting orders for goods that need to be shipped to us in boxes."
That is more telling than most would know. In the U.S., International Paper is one of the first companies economist look at when looking at the rise or fall of the economy as cardboard orders predate the rise or fall of part of GDP by about 10 months. (6 months for business sales and another 4 months for consumer impact). Rolled card/paper stock and metal/steel orders are another - (for mandrel produced can production -as in can goods in the food markets.)Boiler
There are minimum age requirements on reverse mortgages. Not positive, but I think you have to be over 62. I doubt FG qualifies on that score/Joe
"I doubt FG qualifies on that score." Thank you, Joe, so sweet. And thankfully, it's true!forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
Very early in this thread there was some discussion about things not being all that bad in Canada, kinda "what recession?". Well, I heard a number on the news that helps explain: Over the past year (I think?), United States banks have lost 9 billion dollars; over the same period of time, Canadian banks showed a profit of 9 billion dollars (I assume converted to be equivalent).
This would be why the effects of the "credit crunch" are taking awhile to be felt in Canada. Canadian banks have much better regulation than our banks and "shadow banks" (the worst culprits). forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
Maybe the Canadian govt did not pass a law that mandated giving loans to people that could not pay them back?
Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
Edited 2/23/2009 12:47 pm by bones
I don't remember all the details (our financial advisor explained some stuff -- retirement funds are connected to a Canadian bank), but a big part of the difference on the investment side has to do with the regulations affecting "short sales" -- Canada is much more strict. I got the impression that banks in Canada are much more like what our banks used to be -- financial institutions that were expected to take care of your money while lending it out, less speculative, etc., etc. This conversation took place months ago, and I don't retain that stuff well.....
forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
Edited 2/23/2009 4:07 pm by forestgirl
Hi From the still frozen North. Funny our advisor says it's all wall street!
Canada Mortgage and Housing Corp CMHC the leading mortgage insusrer, had a 5% down 40 year mortgage. The lenders discouraged these loans and I believe they have quit offering them. Saw the writing on the wall I suppose.
Our banks are regulated differnently and are profitable. Some took some hits already but they always seem to be in the black.
I haven't heard much about restricted credit yet, But things have slowed out west mostly to drop in crude oil prices.
If you live in central canada the auto industry is wobbly at best and depending on the US bailout.
Yet some sectors are still looking for skilled labor! They are talking about pouring money into infrastructure. They are also trying to finish some mega projects that were started a while ago and others may go ahead due to the drop of steel prices.
The Agro sector is hurting bad especially the cattle. The softwood industry is just about dead.
Your report from the North
Hi, Shoe, I've heard that Canada's starting to feel the pinch. Can totally understand the softwood industry's demise -- not much building going on. Our farmers are planting less, and the dairy industry is really hurting, as demand is far less than it was a year or so ago. They are either turning cows out to pasture or sending them to the slaughterhouse.
"...5% down 40 year mortgage. The lenders discouraged these loans...." One would hope! Still, that's more reasonable than zero down, no credit or income check and a low payment that doubles in a few years. Sheesh.
Thank your lucky stars (and your lawmakers) for the regulations that kept the banking and investment industries in line better than ours! Maybe they'll give work permits to our skilled laborers who're out of work, selling off their tools and such.
Take care guy....forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
Hi Forest
Are you selling off tools? Sure hope not.
If you are a skilled worker, in a designated trade you can get fairly fast I understand.Google Saskatchewan and Jobs or the like and you should see you looking for who.Our Government is a mixed blessing but they are a little more resistant to the lobbiests, than others. That said they are wimps when it comes to ethnic and cultural issues, Don't want to get reved up on that. "Politically correct" has now replaced common sense!!!!! They are so afraid of upsetting a few people and end up offending the rest, e.i normal working people.Back to the economy, my personal opinion is don't give the bail outs to the Corporations, give it to the people. Then they can pay the mortgage an perhaps a more fuel efficent car/truck. It"s our money and if they want the economy to kick, then give it to us to kickaround. If you give it directly to the corps only a few benifet. Before some on calls me a socialist Forget it. Both our government give lip service to the small business people, as the most flexable, and first to hire. If you give those people money they can stretch a dollar further and everyone wins.
I know what I need and a new truck would be nice and haven't had a new tv in ages. Each person/family can decide what they need and not what they think we need.I have two kids about ready for college or University. What should they take?
God bless Grandma, who left them some cash for post secondary. Thanks MoM.Should shovel some more snow but really don't feel like it.
my personal opinion is don't give the bail outs to the Corporations, give it to the people.
I for one agree and not agree. "bail outs to the Corporations".. That saves many jobs that the workers need. And for all the workers that supply them.
CEO and other top managers should not get anything. They got us here in the first place!
EDIT:
my personal opinion is don't give the bail outs to the Corporations, give it to the people.
I would like 20 grand for a new Euro saw I don't need!
Edited 2/25/2009 7:31 am by WillGeorge
had a 5% down 40 year mortgage.
I believe that went away quietly last fall... after the US mortagage crisis. There was actually a run on mortgages just before it happened as first time buyers tried to break into the market.
There is one difference... the average house price in Canada is huge compared to most places down in the US. Average house prices here in Calgary were/are? over $400,000CDN! Add to that we can not deduct interest on income tax...
"...Add to that we can not deduct interest on income tax..."
Give Obamma and the Democrats time they will fix that! They will call it a tax loophole and demand it be closed!
Here's another little ditty that a lot of people don't realize. People who are in trouble with mortgages here in the US are getting some of that debt written down (principle) to help them stay above foreclosure in some cases. The amount forgiven is considered taxable income as far as the Govt is concerned. How's that for insult to injury.
Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
Edited 2/25/2009 9:07 am by bones
"Here's another little ditty that a lot of people don't realize. People who are in trouble with mortgages here in the US are getting some of that debt written down (principle) to help them stay above foreclosure in some cases. The amount forgiven is considered taxable income as far as the Govt is concerned. How's that for insult to injury."
the insult is in making those who've been responsible, pay for the irresponsibles. thats' just wrong on sooo many levels.
Amen Brother! Remember S-P-R-E-A-D-I-N-G T-H-E W-E-A-L-T-H!Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
Reduction of mortage principal will require new legislation for bankruptcy judges to be able to do that. Until such new legislation, bankruptcy law doesn't let that happen for residential mortgages, even though in commercial bankruptcies, any amount of secured debt that is in excess of the value of the collateral is treated as unsecured debt and typically haircut significantly.
Butch,
I wonder if the 1000$ a year incentive they get for making their payments on those new renegotiated morgages will count as income too.
Ray
This was sent to me as a joke. Maybe it is and maybe it isn't!
Shortly after class, an economics student approaches his economics professor and says, "I don't understand this stimulus bill. Can you explain it to me?"
The professor replied, "I don't have any time to explain it at my office, but if you come over to my house on Saturday and help me with my weekend project, I'll be glad to explain it to you." The student agreed.
At the agreed-upon time, the student showed up at the professor's house. The professor stated that the weekend project involved his backyard pool.
They both went out back to the pool, and the professor handed the student a bucket. Demonstrating with his own bucket, the professor said, "First, go over to the deep end, and fill your bucket with as much water as you can." The student did as he was instructed.
The professor then continued, "Follow me over to the shallow end, and then dump all the water from your bucket into it." The student was naturally confused, but did as he was told.
The professor then explained they were going to do this many more times, and began walking back to the deep end of the pool.
The confused student asked, "Excuse me, but why are we doing this?"
The professor matter-of-factly stated that he was trying to make the shallow end much deeper.
The student didn't think the economics professor was serious, but figured that he would find out the real story soon enough.
However, after the 6th trip between the shallow end and the deep end, the student began to become worried that his economics professor had gone mad. The student finally replied, "All we're doing is wasting valuable time and effort on unproductive pursuits. Even worse, when this process is all over, everything will be at the same level it was before, so all you'll really have accomplished is the destruction of what could have been truly productive action!"
The professor put down his bucket and replied with a smile, "Congratulations. You now understand the stimulus bill."
Bruce"A man's got to know his limitations." Dirty Harry Calahan
Good one. Sadly true!
Does that time apply for credit hours?
Ah. but you missed the point. The economics professor had to pay the student to haul the buckets. Then, the student went to the local watering hole and bought a few beers, the bartenders took the tips, and used them, to buy a new pair of comfortable shoes, The owner of the shoe store, bought some additional inventory, and so forth. At each stage, some of the new spending may leak into savings or exports, but not all of it, and so the process continures, but not forever, in a finite multiplication process.
And, incomes, both wages and profits, increased as a result, and the economy was stimulated. Keyes, in his General Theory of Employment, Interest and Money, 1936 provided the economics profession with the same example, though couched in the terms of digging a hole and then filling it in. The stimulus occurs, but of course society is better off if more productive endeavors are undertaken with the first round of spending. More productive could include unemployment compensation, medicade funding, new roads, repairing old roads, researching new energe sources, and just about what ever. But the message should be that any new spending creates a stimulous.
Well, if "any new spending creates a stimulus", why not let me keep some of my tax money and I will spend it on what I want. Seems far more efficient and would have a more immediate and lasting effect. Stimulus is not the intent of the so called "stimulus bill". A large part is simply redistribution of wealth and spending targeted on politically motivated projects that benefit politicians. It's not about us (the taxpaying citizens), it's about them (the politicians) and their interests.
I think a better analogy than moving the water from the deep end of the pool to the shallow end, is taking buckets of water from the pool and dumping them on the ground until the pool is about empty with the hope that eventually the water will evaporate and form clouds and rain to refill everyone's pool. Noone will have enough left to wet their feet! The "stimulus bill" and the rest of this outrageous spending of money we do not have will succeed only in drowning our children and grandchildren and many more generations in debt, inflation, decline, and despair.
The reason that tax cuts are less effective as stimulus than spending is that people who receive the cuts do not spend all of the money. That is perfectly rational behavior for the individual, but it can mean very little boost from tax cuts, particularly if people use the tax cuts to increase savings or reduce debt as they may well do in uncertain times.
Without commenting on particular projects, I should point out that taxes also have redistributive effects. By the way, the stimulus package consists of a very large proportion of tax cuts.
Even tax cuts that are saved instead of being immediately spent benefit the economic situation we are in today by recapitalizing the banks and stimulating the availability of capital. Saved money is in fact spent in the ecomony and results in growth. The so-called "tax cuts" in the stimulus package will reduce weekly withholding by about $13. Not much stimulation there and spread out over a long period! Or the government will send checks to people who do not even pay income taxes which amounts to welfare and not a tax cut. The spending on construction will cause many projects to begin but they will be underfunded construction projects that the states or federal government will need to bail out for many years to come, resulting in more and more tax increases, corruption, and waste. I live in Massachusetts. Perhaps you have heard of the "Big Dig" project in Boston. Originally this project was to cost about $1.5B. It ended up costing $20B so far because of poor government planning and waste. We are still getting tax increases and fees to pay for fixing it. What is the real cost of all these "shovel ready" projects being rushed into development without adequate planning and oversight? Who knows? What about priorities for all this pork barrel spending? No debate, no discussion, not even reading the bill before voting! This is no way to run a country!
Unfortunately, the connection between saved money and spending doesn't run automatically. A bank deposit of saved funds simultaneously increases the banks assets (cash or deposits at the clearing house) and liabilities (the deposits). Since all the cash doesn't need to be held to cover the liability, it does provide the potential for additional lending, but until the banks lend funds no additional spending can occur. Firms that might borrow that money to finance expansion hesitate because people aren't demanding to buy goods. Banks hesitate to lend because of increased uncertainty as to what projects or which borrowers are credit worthy.
Savings must always equal investment in the economy, that is true, but it many cases such investment takes the form of unintended inventory increases--there isn't a direct translation to productive investment. When savings represent a reduction of total demand in the economy, then it just can't create growth.
Not all projects may be equally desirable for society. That's basically a political question. But just because it isn't a totally desirable project doesn't mean it isn't stimulatory. The the political rhetoric seems to be that if I don't like it it isn't stimulatoryand is just rhetoric.
Steve,
I understand your point of view, but respectfully disagree. The government does not know how to spend money that will result in lasting jobs and a stimulated economy. Look at the people who are deciding what to spend our money on. They do not inspire my confidence that they are capable to make educated economic decisions. Very few have ever had a real job outside of politics. Government doesn't have the money to spend. They take it out of our pockets now and our children's and grandchildren's pockets and spend it on politically expedient projects. Some are worthwhile and may even be necessary regardless of effect on stimulus, some are a total waste, some only expand government, some will result in a perpetual waste of money, and most that are stimulatative have very high cost per job produced. They plan to increase taxes on the businesses that employ us, but the increased taxes cause businesses to contract. How does that create more jobs? In my opinion, the net effect is not stimulative, but rather will result in extreme inflation in 2-3 years that will make life very difficult and could even lead to the collapse of the US.
Good luck!
Edited 2/26/2009 1:55 pm ET by RonRocheleau
It's pretty easy to criticize.
What's teh alternative? Do nothing? Just watch while banks fail, businesses fail, homes are foreclosed, jobs are lost and the death spiral speeds up exponentially?
The government is us. We are a democracy. We have elected peole to try to take our combined assets and avert greater catastrophe.
I didn't vote for anyone to take my assets and spread them around. The government is not the Sugar Daddy of the American people. How about living within one's means and taking responsibility for one's actions? Some people acted irresponsibly or were greedy and do not deserve to be made whole on the backs of others, including the banks, missrun businesses, and people who deliberately over-extended themselves. They should suffer the consequences of their own actions. Others, who are now losing their jobs, and have acted responsibly but need help to stay in their homes should get it. The politicians who advocated the practices of FNM and FRE and lowered bank required loan regulations should be put in jail and throw away the key because they fostered the whole housing debacle that made this mess we are in.
I didn't vote for anyone to take my assets and spread them around.
Well, um, actually, if you voted for anyone, you did indeed because that's what goverments are and what they do. You pay taxes so that you have roads to drive on and armies to protect you and so on. This is by definition, using your assets to make things shared by all - spreading it all around.
The government is not the Sugar Daddy of the American people.
You keep speaking aboutthe government as though it is some separate entity. In a democracy, the government is us; by the people for the people etc.
How about living within one's means and taking responsibility for one's actions?
Well, the trouble is that over the past 8 years, we haven't done that.
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Instead, we pursued a war of choice, lowered taxes on the rich, and otherwise made poor decisions that have now come home to roost. We definitely ought to get back to living within our means and taking responsibility for our actions.
Some people acted irresponsibly or were greedy and do not deserve to be made whole on the backs of others, including the banks, missrun businesses, and people who deliberately over-extended themselves. They should suffer the consequences of their own actions.
So you think we should cut off our noses to spite our faces. It's as though we are in a lifeboat with the crew that negligently drove our ship into an iceberg; the lifeboat is leaking; should we refuse to bail or stop the leak in any way we can because that negligent crew will survive too?
Others, who are now losing their jobs, and have acted responsibly but need help to stay in their homes should get it.
Do you contend that there are some people (if so who exactly?) that don't wish to help these folks?
The politicians who advocated the practices of FNM and FRE and lowered bank required loan regulations should be put in jail and throw away the key because they fostered the whole housing debacle that made this mess we are in.
I don't think you understand how this stuff works or how we got here. Fannie Mae and Freddie Mac do not make loans. They buy loans from banks. The banks originate the loans. And FNM and FRE have absolutely nothing at all to do with the credit default swaps and CDOs all that bs that compounded the problems infinitely.
The politicians who ought to fry are those, like Gramm, who allowed these completely unregulated and fraud based markets flourish.
Have another kool aid. And you forgot to add the massive spending of the Obama admin, which already dwarfs everything else in your graphs.
What necessitated it, Ron?
It wasn't necessary to do what was done. It is excessive and wasteful and just the beginning. It is symptomatic of the problem that started the whole mess. Spending what you don't have. There will be severe consequences when the bill comes due. It happened in housing, in the coming credit card problem, and in the wasteful government spending. By the way, I refer to government because I am including Democrats and Republicans alike. Spending is out of control and has been for quite some time. The government established by our Constitution does not have the role of wealth redistribution. It has a role in providing for the common good and defense. Roads and the military to use your example. Where in the Consititution can you find the role of government to take from one to give to another? That is more akin to communism than democracy. So no, I did not vote for the government to take my assets and give them to someone else. Taxes that are spent for the common good are not the same thing.
Your statements are rather conclusory: "wasn't necessary" "wasteful" "excessive". How do you know this? On what basis do you make these assertions. Did Rush tell you so?
As for the "common good" versus wealth redistribution, this is a bogus distinction. Is it a common good when we all contribute money for schools whether we have children or not? Is it a common good when we innolculate the poor against disease when they otherwise could not afford the shot? Would you rather disease spread or you be forced to pay more for the treatment rather than the prevention? How about when we make provision for unemployment benefits to bridge the hardship between an unexpected layoff and that worker finding another job? Does that not benefit the common good? Foodstamps then? The poor - the willing and desperate to work (now over 8% of us) - they should go hungry? The list goes on and on, but I think you get my point.
The stimulus plan does not address the social issues you raise. We all have a moral obligation to help others in need. That does not mean that government is the only solution or the best solution to aid those who have need of assistance. It seems pointless to continue the discussion. I wish you the best and in a few years we will see how it all turns out. In the meantime, I will refinance my home to get out the equity, spend the money on stuff I don't need, stop paying my bills, quit my job, stop paying taxes, and await my government check. You can just send your taxes directly to me if you want to cut out the middle man! :)
Not that what the stimulus plan does or does not do is particularly relevant to the more general discussion of "wealth redistribution" versus "spending for the common good," but as a matter of fact, the stimulus plan addresses most of the things I mentioned: it has provisions aimed at education and schools; it extended unemployment benefits; it increases food stamps, etc. A quick Google search will yield scores of articles like this one (http://cashmoneylife.com/2009/02/18/2009-economic-stimulus-recovery-education-food-stamps/) summarizing the main provisions. Perhaps you ought to find out what it actually says or does before criticizing it? Just a thought.You have this attitude that people only end up in dire straits and need assistance if they are irresponsible and lazy. This just is not the case. May you never need the government's assistance. I agree that continuing this discussion is pointless.
The reason that tax cuts are less effective as stimulus than spending is that people who receive the cuts do not spend all of the money.
What you are really saying is people will not use THEIR money they way the Govt wants them to! Its the peoples money not the governments! A rising tide lifts all boats
That is perfectly rational behavior for the individual, but it can mean very little boost from tax cuts, particularly if people use the tax cuts to increase savings or reduce debt as they may well do in uncertain times.
Without commenting on particular projects, I should point out that taxes also have redistributive effects.
I think the real term is generational theft!
By the way, the stimulus package consists of a very large proportion of tax cuts.
The only thing that got stimulated by this package (load of is a better word), was the governments desire to make us more dependant on them. This is just the down payment on whats to come. Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
GOOD ONE!
Ray, I'm bettin' it will... ain't nuthin' for nuthin' in this world...
Butch
"Butch,
I wonder if the 1000$ a year incentive they get for making their payments on those new renegotiated morgages will count as income too.
Ray"
Dang, I thought Foreclosure was always my incentive, but that's just me.
Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
bones,
Yeah, I have been thinking all these years that keeping a roof over my family's heads was a pretty good incentive. We are so yesterday in our thinking. Gov't paying people to pay their mortgages, to shore up the banks which the gov't is throwing money at hand over fist. Bad behavior rewarded up and down the line. The world is upside down.
Ray
Gentlemen - What you should know about the mortgage situation is that those that did something stupid and signed up for a massive mortgage with no income are a rather tiny minority. Many of the people that the government program is at least intended to help purchased a home with a conventional, 30 year mortgage, paid at least 10% down, and documented their income as all of us did 10 years or more ago.
However, their loans are now being called into question because, through no fault of their own, their houses have declined significantly in value to the point where the mortgage significantly exceeds the asset's worth. In normal times, they could've signed up for an adjustable, 5 year ARM whose interest rate was very attractive, and done so because uncertainty in their career meant a 30 year mortgage made little sense, and in those normal times they could've easily re-financed their mortgage into a 30 year fixed when conditions changed. They can no longer do so because they'd have to come up with several hundred thousand dollars in cash to cover the difference between the financed amount and the recently assessed house value.
It also means that individuals in this situation can't sell their home, as the reasonably expected sale price will not cover the mortgage, and again they'd have to come up with several tens of thousands to hundreds of thousands of dollars in cash to close the mortgage out normally.
And I for one, though I have a conservative mortgage on a 30 year basis and don't owe anywhere close to what the house is worth, am glad that someone in DC has their head on straight and realizes that we are all connected, and our fates are linked. I don't want to see a 10% default rate in my neighborhood because there's a "tough cookies" attitude in Washington that says "regardless of the completely unprecedented drop in value in the housing market, you got yourself into this, get yourself out". Doing so will mean that the value of my property will crash, and I may well find myself in the same boat, regardless of how responsible my mortgage may have been when I signed up for it.
totally agree... but no matter what you do to turn things around, unless you change attitudes, it'll all go for naught.. and I've yet to see that change happening
The amount forgiven is considered taxable income as far as the Govt is concerned.
And they thought that fancy Lawyer and Uncle Sam gave them a free ride! And like SS payments. Taxed... Military pay. Taxed! I could make a long list of these.
And some rich cat with a bunch of Lawyers pays little tax compared to most of the 'grunts'. Maybe the rich cats Tax is the pay for the Lawyers that have to pay Taxes? I have nothing against being rich though! Sure wish I 'had to pay full Tax' on my multi million dollar income!
I agree Derek. I also live in Canada (NB) & can see no big changes due to the financial upheaval spawned in the US. Our dollar is still worth a dollar at home. My monthly expenses haven't risen significantly, gas prices are the cheapest now that they have been for a long time. My prices for kiln dried lumber for cabinets & furniture haven't risen dramatically - basically the same for last 10 years. Our forestry industry in Atlantic Canada has slowly been going down the tubes over the last few years anyway, resulting in some career changes & unemployment & I'm sure Ontario is hurting as they are the automotive center in Canada. Granted, everyone is moaning about the stock market tanking, affecting their investments/RRSP's, but there are places to transfer that stuff to hold it's value & cover our normal inflation. For anyone wanting a loan or starting a business, interest rates are the lowest they have been for years. Granted, anything we need that has to be imported from the US (ex - Steel City tools) we may have to pay a bit more, but overall we ain't doin' too bad.
That is the attitude. We make Canadian money so I figure why not spend it in Canada... We don't need any import tools. King tools are "Canadian" and I feel they are just as good as the competition. We have Lee Valley, which is highly sought after. Prices may go up a bit but my wage just did too.
Happy Recession
Derek
I wouldn't mind being Canadian at this particular moment, LOL. From what I understand, Canadian banks are much better regulated that American banks, so they (as a whole group) have not imploded they way US banks and other financial institutions have. I suppose that probably means that credit is not as suddenly-iimpossible-to-get, as has happened in the US. This may well be a major reason why Canadians are not feeling the downturn the way their southern neighbors are.forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
so I figure why not spend it in Canada.. USA here.. I purchase from Lee Valley whenever I can. Been in Canada a few times.. OK so more than a few times. Mostly in Toronto. Is THAT really Canada? Quebec a few times and for a USA man with French kin I was not treated very nice in my way of thinking. NO, I do not speak French but my kin go way back there, as in my Irish and German! I guess I'm just a Mut Dog...
Funny. . .I always thought Quebecers were quite fond of dogs! When I'm in Quebec and detect some reaction to being an "anglo" I just break out the Southern accent I was born with and never have a problem! American "anglos" are welcomed as long as they aren't rude. I've lived here for almost 35 years. I'm a Canadian citizen, love the fishing, hate the winters and pay more taxes than seems reasonable. Having lived in Montreal, I can honestly say that it is one of the top 10 cities in the world if you give it a chance. Great food, great fashion, a joy of living, beautiful women and a transit system that works most of the time! Regards,Ron
That is the attitude. We make Canadian money so I figure why not spend it in Canada... We don't need any import tools. King tools are "Canadian" and I feel they are just as good as the competition. We have Lee Valley, which is highly sought after. Prices may go up a bit but my wage just did too.
While I will not comment on the quality of king tools, we do have General Canada... which are some of the best made tools. We also have General International, while not made in Canada are pretty good too!
I have to concur with your assessment, Canada has not been hit across the board. Some industries have been hit hard, auto being one, oil sands development being another, and of course mining. I do take a little exception to RoninOttawas assessment that the rest of Canada (those outside the province he lives in) are 'Economically the Tail of the Dog'... Sounds like he works for an auto union.
In the end, as long as your working now and you've acted responsibly over the last few years you should weather this crisis fine. As my company put it, downturns are full of opportunity.
I do take a little exception to RoninOttawas assessment that the rest of Canada (those outside the province he lives in) are 'Economically the Tail of the Dog'... Sounds like he works for an auto union.
__________________________I do not work for an auto union or any union for that matter. I'm not even involved in manufacturing. I'm on the verge of retirement (for the second time) as President of a small software company specializing in artificial intelligence applications. Canada's economic health, for better or worse, is tied to our ability to export. Central Canada, and Ontario in particular, generate 60% of all Canadian exports. Ontario and Quebec also have 60% of the population. If/when exports take a major hit the effects will be dramatic. (Source: http://regional-business-profiles.suite101.com/article.cfm/canadian_trade_statistics_by_province)Another way to look at it is to simply look at our GDP, and where it is created. Ontario generates 38% of the Canadian GDP and if Quebec is added the total rises to 57%. The bottom line is that if Central Canada gets a chill the rest of Canada gets a bad cold. (Source: http://www40.statcan.gc.ca/l01/cst01/econ15-eng.htm) I'll stick with my "tail of the dog" analogy.Combine the above with the fact that Alberta is being hit hard by the reduction in oil sands activity and BC is still dealing with the perennial issue of software lumber exports and a collapsed US housing market and you have a recipe for a very difficult economic climate. Regards,Ron
Ron,
Yes, but the rest of Canada is 40% of the GDP, that's hardly 'the tail of the dog'. It's almost half the dog. Being born and raised in Western Canadian I'd prefer to give you the back half... :)
Buster
Understood! I lived out that way for 15 years after I came to Canada in '74. I still butt heads with some folks back here, particularly those from Toronto! In the US I suppose I would be considered a somewhat conservative Democrat. . .in Ontario I'm considered a right-wing Tory. I just don't believe in fairytale answers and burdening my kids with a huge debt that means they will be paying even more taxes than I do!Regards,Ron
"---fairytale answers-----huge debt"
Absolutely! One hundred per cent correct!!
Accountability, responsibility and efficiency practiced by the government not just the tax payers; that's what's needed!!
Regards from Washington (state)
Mack"Close enough for government work=measured with a micrometer, marked with chalk and cut with an axe"
".. I would be considered a somewhat conservative Democrat"
There is no such thing anymore. There existed a group a long time ago in a land far away that were of that persuasion often referred to as Bluedogs. Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
".. I would be considered a somewhat conservative Democrat"There is no such thing anymore. There existed a group a long time ago in a land far away that were of that persuasion often referred to as Bluedogs. Bones,I've lived places where I was considered almost a goose-stepping conservative and others where I was left wing liberal. It depended on the subject.I tend to agree with conservatives much of the time but when I run into the "all or nothing" mindset it keeps me from buying in. The people that say "Moderate Republican" with a sneer don't seem to have much faith in our system of government. And it seems the my-way-or-the-highway approach hasn't really worked to the country's advantage, hopefully this loyalty to party over country will recede during these tough times.
In the US I suppose I would be considered a somewhat conservative Democrat. . .in Ontario I'm considered a right-wing Tory.
Same here. While I find the conservative government the most appealing... I also find some of their members plain scary. The Eastern (Toronto) view that Alberta is full of red necks just isn't true.
Buster,My wife's brother lives in Calgary, and I think he's become a redneck, if a redneck can speak with a heavy Filipino accent. Boy, he loves him some Kokanee, which is one of three requirements to be validated as an Albertan redneck. (Other acceptable requirements - so eager to fish that you throw a hook into any freestanding bucket of water, and your children have mullets which are clearly seen in the prenatal sonogram pictures...)He lives 5 minutes from the Lee Valley store in SE Calgary, so it's a double treat to come up from the States for beef, beer 'n tools.To address the topic (we can do that?), I've stopped all woodworking. Period. My frugality measures include not running any electric tools and a complete moratorium on spending any money on wood, supplies, tools, magazines, etc. I have shut down my hobby, yessah.I was pink slipped in early January, and I'm fortunate to have picked up a 40 hour/week contract job. My wife's company has been very iffy for a year, and there are signals that the next round of layoffs might get her. That, on top of she's done work-share for 2 months, which is like her getting laid off on every Monday.There's a Lie Nielsen tool show at the Crucible in Oakland, CA this weekend, probably plenty of lookers, not too many buyers.Cheers,Seth
Geesh you fellow canucks!!
The federal Gov announced a 10% tax thing on renos are your phones not ringing off? What a useless drop in the bucket, as most couldn't get credit to do anything.Here in Sask we had the highest saving rate per capita for years and now all the old depression babies are passing away, our savings rate has dropped to about 0.I paid 92.9 a liter for gas today, the price of a barrel of oil is still very low, who is making the profits?? read earlier posts, according to all the last year economic spin gas should be about 60-65 cents/litre. What is a reasonable profit? Can I change my labor rate because some one farts in the middle east? World prices are an excuse to put aside the vaseline and do a direct drive to the oil addicted consumer.Hurt'in
"I paid 92.9 a liter for gas today, the price of a barrel of oil is still very low, who is making the profits??"Yeah, we climbed to just higher than 80.9 a liter, and we pull the stuff out of the ground just up the road! In the end, while a barrel of oil effects the price, refining costs will decide the price at the pump. Apparently they just aren't refining enough of the stuff these days... (Really with the exception of the super majors, most large oil companies don't run refineries.)
Here in Vermont things could be worse. Home prices are down a little and jobs are hard to find. My employer has layed off about 400 this year, and about the same last year plus at least that many contract workers in the past year. My pay has been cut, along with 800 other folks. A local new Lowes store had 1400 applications for 120 full and part time jobs. My side woodwork business has been the slowest I've seen, though I am starting to see more customer interest, and expect one or 2 new projects today, plus more in April.
My main job is in the semiconductor industry. It's my observation that this is one of the 1st industries to see an uplift in the economy. These chip factories ramp up production about 3 to 4 months before the chips go into consumer products. Our factory has seen an increase in orders after an all time low. IF this is any indicator, maybe we are starting to turn the corner.
Economic indicators as you said also include, believe it or not, the amount of refuse that goes into landfills. A little over a year ago we saw a significant reduction in trash, especially construction debris.
I guess when things get tight folks hang on to everything, including their trash!
Regards,Bob @ Kidderville Acres
A Woodworkers mind should be the sharpest tool in the shop!
For the record... Kokanee is a British Columbia beer, we in Alberta drink Kokanee Gold. The higher priced version. I might as well point out as well... A kokanee is a type of fish.
Buster,Thanks for setting this US tourist straight. My BIL buys the blue Kokanee, so I've not seen or tasted the Gold version. Praise goodness that Kokanee beer doesn't taste like sockeye salmon. Either the BIL hasn't read "The Alberta Man - What To Know" user manual, or he's clearly picked the wrong beer. I'll be sure to ask him on this point.Might I add, though, that his marinated Canadian skirt steak with Kokanee Blue was worth the 1500 miles we drove from California's SF Bay Area to Calgary. We took some beef home, too, US Border said it was legal.Cheers,Seth
blue Kokanee...
That's the original. Next time you head up to these parts drive through BC, you can stop in Creston and go for the brewery tour... They give you a free beer at the end!
THE Alberta beer seems to be any product made by the Big Rock Brewery. It's a 'Micro brewery' (or at least it was). Great selection. I'm more of a cross Canada drinker myself. I'll drink any beer...
Hi,
King Tools are Canadian? I thought they were made in China, or Taiwan.
General is Canadian.
They are sold out of Quebec. I think they are manufacteured overseas. But at least the profit is going to a big wig in Canada, I think?
They are good tools anyways.
Derek
Hi
Yeah, I see your point.
Ken
Piker,
When America starts sneezing the rest of the world will get a cold, it's only a matter of time. That's partly why everyone compares their money to the dollar. As far as loans, yes interest rates are very low but try getting one with anything but perfect credit, lenders are scared and way to cautious right now. I agree with much said here, but I just returned today from my wood source and he is closing his doors because too many of his life long clients and friends are losing their shops. It is sad when artists with gifts can no longer inspire those of us that are living the dream as a hobby.
Good luck and fortune to all of you!
Kevin
"But if the government sends me money again it’s going in the coffee can in the back yard."
Better make sure that coffee can is waterproof...
Chris @ www.flairwoodwork.spaces.live.com
(soon to be www.flairwoodworks.com)
- Success is not the key to happines. Happiness is the key to success. If you love what you are doing, you will be successful. - Albert Schweitzer
The economy has affected me several ways. I (we) live mostly on interest from investments. Since the Fed has been reducing rates over and over, our income is drastically reduced from several years ago. The other way it affects us is that the upkeep on (2) motgage free homes keeps going up, (taxes, utilities, insurance, etc.)
We probably live on (and spend) half of what we did a year or two ago. So this economy doesn't just affect the "working" "middle class" (those words are thrown about a lot lately), but put us old f**** n the same boat.
James
It's true that many, many people in this country are hurting at this time. And many more will also be by the time the economy turns around.
It must be devastating to depend on a job for income and then lose that job. And it seems as though most companies are laying off instead of hiring, so job prospects for those who have been downsized are dismal as well.
I'm in a different boat. It's been years, decades, since I had a "real" job - one where I had to be somewhere at a certain time. So I don't really have a job to lose. On the other hand, the freelance architectural photography work I do (or did), came to a sudden and dramatic halt about two years ago. When builders and developers aren't building new homes they aren't hiring me to photograph them.
Luckily, living through a lot of economic ups and downs has taught me to be resilient - and frugal! I never did have champagne tastes, and it's a good thing. Especially now.
I live by hustling up work, keeping my ears open, and maintain a willingness to do jobs that others don't want to get into. And there's a suprising amount of it out there if you have certain skills. I built a covered walkway for a custom home last fall that the owners were having trouble finding a contractor willing to put time into the design work. I did it, and made good money. I showed up on time, returned their phone calls promptly, and took a real interest in the work. They liked my enthusiasm and have since hired me back for other work - painting, and building a maple dining room buffet.
I've talked to people who have worked for corporations all their working lives, and they're completely buffaloed by the prospect of working for themselves. One guy actually said, "You mean you don't get a paycheck every week?" Heck no. Sometimes I don't get a check for months at a time.
But my point is that there is still plenty of work out there if you're willing to beat the bushes for it. Frankly, during the last few months I'm even a bit busier than I want to be and I'm feeling a bit rundown with all the hours I'm putting in. I've got a shop full of cut up sheet goods for a set of simple birch plywood shelves for an interior designer, a bed to repair, and a coffee table to build.
Don't despair. Things will get better. But part of that is that you can make things better for yourself. Yeah, it's a tough time. But if you put your back into it and are creative you can get through it all right. Compared to what our parents and ancestors went through with wars and disease and real, abject poverty, this is, well, - it is a big deal to a lot of people - but things aren't as bleak as they could be.
ZoltonIf you see a possum running around in here, kill it. It's not a pet. - Jackie Moon
I'm not exactly sure why it is but my site traffic has gone up considerably since the "recession" really took hold. I also am getting more email from people buying tools than in the past and while I am sure some of that increase is just because of the increased traffic, people are still buying tools. I expect a good portion of them are taking advantage of sales and shipping deals being offered. I also began sending DVDs internationally and Canada has been at the top of the international list from the start of that.
Tom Hintz
Because there is always more to learn!
some very interesting eading here on the matter. Truth is: we've never been in THIS shape before, 'cuz we've never been so intertwined with a Global Economy before. Canada may be in better financial shape than the US, but if the current world financial trends continue, it'a only a matter of time before they begin feeling the squeeze,too. it doesn't take a rocket scientist to understand assets/liabilities. when you have more debt(liabilities) than you have income(assets), then you are heading in the wrong direction financially. this nation is borrowing at alarming rates, just to keep the boat afloat as it is. manufacturing is declining at alarming rates, with no increase in sight. peronally, I balme much of that on corprate and personal greed. when we as woodworkers saw the demise of american-made machines,replaced by foreign machines,we should have been alarmed. same applies to many,many other manufacturers of items once built here, but no longer are. when you ship out more $$ for products ,than products themselves, the balance groes against you..and it's waaaay outta whack, isn't it? houses were never meant to be money making entities, but were built for the purpose of shelter. many of the ones' who got bitten recently, have only themselves to blame, for trying to "flip" a home to make $$. forget those who, by past lending practices, would never have qualifies for extremly priced homes, yet bought 'em anyway. they knew that "interest only" loans would come back to bite 'em, IF they didn't flip the house w/i that year. they got greedy, and gambled....and lost. I also must place some of the responsibility upon contractors/developers who built homes which provided the most profit... forget the small ranchers that were plenty good enough for a family of 4/5.. they built mcMansions for a reason..... more profit. I live in what was the 26th fastest growing county in the nation before bottom hit, and you couldn't find a reasonable sized home being built. not from Dan Ryan/Toll Bros/ Whitmore/ or even what few locals that tried to keep up.also, the Bailouts will be a failure, as was the 1st 350 BIL throwaway. for those who have good spending habits, this shouldn't hurt them as badly as those who displayed no spending control/discipline.
Well we have all decided that this recession, soon to turn into a depression (20 % unemployment definition) will be the shizer. If you don't think this will get worse, then don't take your head out of the sand. Several economists here in Phoenix do not see a turn around until mid 2011 for housing, and this may fall further back. It's here, it real, and it is going to hurt lots of good people.
I would like to think most of us Baby Boomers, have some savings and have money in the market, their house etc. We will get through this event, if you we on the correct side of a savings/debt ratio.
MY Question is what to do with my savings NOW? What markets will turn around and recover, and what won't? Fine, I have taken a 30% hit on my funds. What and when do you invest in to get ahead?
My landscape company has weathered it to date, but the bottom is here. I have 4 projects to finish, and I am considering going on sabbatical. More time to go to Mexico, work in my shop, do some biking etc. When things recover, I reset and go back to work. REverse retirement, travel now, work later? I hear of Apartments in Mexico for $350 per month... could work indeed.
Morgan
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For those who have spent any significant time from the early 80's to present in midwest rust belt cities like Buffalo, Youngstown or Detroit, 7.5% unemployment is not that bad,(unless you are one of the 7.5%).
The reality is that the US lost its competitive edge long ago in heavy industry, and with few exceptions, we don't have much of an edge left in any other sector, except of course, custom arts and crafts furniture building. This, combined with our disregard for the costs of excessive borrowing, has created a problem that is merely in its early stages at this time.
In a few years we will look back at 2009 as a relatively prosperous time, when unemployment was at a relatively low 7.5%, the dollar still had value in the world markets, the stock market had only begun its downward spiral, and food and gasoline were affordable.
Sorry to jump in here late but I feel exactly the way you do! I know that there are those that aren't doing well in their business or what ever but I'm having a hard time figuring out why I should feel "depressed"!
I think the media and politicians are largely to blame for the perception that the sky is falling.
One of our businesses is paint contracting and we have a steady stream of invitations to bid. A lot of these are stores that will sell stuff that no one really needs like fancy purses and spendy tennis shoes. If the economy was as bad as the media says wouldn't this have dried up? Try to find a place to park at the mall on the weekend!
"They" are trying to convince us that this is the second coming of the Great Depression. Our unemployment rate is now around 7% and projected to go 11 or 12%. During the GD it was 30%!!
The economy will right itself through supply and demand as it always has. The worst thing that can happen is for government to try to "help" it along!
"Government that governs least governs best" Thomas Jefferson
"You can't build a strong economy on borrowed money" Abe Lincoln
Politicians want to be in power during a bad economy so that when it gets better they can say "see what we saved you from". I wish they would stop spending my money on propping up big businesses that are not managed as well as our little "mom and pop" painting business!!!
Sorry for the vent but you pressed my "start" button!! LOL
"It riles them to believe that you percieve the web they weave---keep on thinking free" Moody Blues
Best Regards,
Mack
"Close enough for government work=measured with a micrometer, marked with chalk and cut with an axe"
"One of our businesses is paint contracting and we have a steady stream of invitations to bid. " Regional thing, Mack, you're in the same neighborhood as me -- Seattle. Our heads are above water at the moment. Have you paid attention to the news about sales tax revenues and B&O payments dropping drastically?? Perhaps not. Our municipality (Bainbridge Island -- median income higher than I can grasp mentally) is in dire straits due to the drop in these revenues. The entire state's revenues are way, way down, hence the large deficit we're facing for 2009.
If your business is good, no need to feel depressed, for sure. But don't be surprised if things change in the next few months. forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
Forest Girl,
I'm not saying that everything is roses. My head is not in the sand. My point was that this mess was brought about by a lot of entities, individual and corporate, living and operating beyond their means, spending more than they earned and acting in general as if there were no consequences.
Tomorrow is here! I don't think putting the whole country close to a trillion more in debt is the answer to anything!! Who will end up paying for it? The folks that lived within their means, paid their bills on time and did not expect a bail out; that's who will pay in the end.
As Warren Buffet so eloquently put it; "Capitalism without failure is like Christianity without hell". IMHO, the action currently being taken by our elected reps. will only delay the inevitable and cause more harm than good. That is of course unless they are correct in assuming that the amount of debt just doesn't matter. I don't subscribe to that for a second!
I'm on a rant and I guess this is why there is "Cafe", which I have not requested permission to enter. LOL
Hope you and yours weather the storm, my guess is that you will be just fine as you seem to have common sense and an attitude of practicality.
Best Regards,
Mack"Close enough for government work=measured with a micrometer, marked with chalk and cut with an axe"
"...which I have not requested permission to enter. LOL" You must have somewhere along the line, 'cause you're here!! ROFL!forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
I need to thank y'all for the full north American view in your areas. I has been truly informative vs. the BS we see on the "sound bite" , teaser comment, we will get good ratings , news programs.
Here is a micro (very slanted) view from a very suburban, mainly blue collar/middle manager town on Long Island NY.
-regular gas is today $2.05. It moved in 45 days from @ $1.65 despite the fact that the folks in Gaza stopped shooting at one another, no other major negative events (other than the relatively peaceful elections in Iraq) in the middle east and much lower oil consumption in the USA.
WHY? Is it perhaps that the oil guys disassembled refineries in the 1970's and decreased the capacity to refine so now they can claim shortage or that the oil business depends on the commodities market- wall st.- to bid the price up till "we all make a profit" like Leon Hess did in the 70's when he had a tanker ship of his own oil from his tanks in St. Croix arrive in Staten Island at $45 a barrel --ps. it was $14 a barrel oil when it left St. Croix but had been bought and sold en route till it was worth more on arrival, cool business eh. Today they just do it on the computer-I guess it saves the wear and tear on the ships, ya think.
Oil is the big problem as it impacts every thing, transportation -see grocery prices-power generation thus every house in the USA and manufacturing that needs power and oil byproducts like plastics. If Teddy R. the Rough Rider was about he would have their guts for garters , for sure, where is our government?
A quickie on grocery prices, a can of real tomato juice(not from concentrate) $1.39 to $1.99, my favorite yoghurt $1.79 to $2.19 and imported two layer/cross packed sardines $3.29 to $4.99. I don't even want to get into fresh eggs --those chickens must have one very strong union!
The bankers who sell smiles, glad hands and intrest(read profits) should be shot on site as on my street alone -6 long ave. deep there must be 20+ houses for sale and a long the avenues (24 streets) two to three per street and some are boarded up. Please move this to the cafe where I can really rant, Paddy
Yo Paddy,
Hey man, I've got chickens and they are members of the Kidderville Acres Pets Union of Tempestuous Slouches (KAPUTS).
Guy down the rud a piece sells organic eggs fur $6/doz. What in tarnation is an organic egg. Mine gits all me shavins and sawdust, does that count? They cackle and cluck when I put new bedding in the nests. A happy chicken lays extree large uns.
Hell man, I'll give ya eggs if ye want 'em.
Regards,
Bob @ Kidderville Acres
A Woodworkers mind should be the sharpest tool in the shop!
Edited 2/10/2009 9:22 pm ET by KiddervilleAcres
Edited 2/10/2009 9:24 pm ET by KiddervilleAcres
All,
My customers who seem the least affected by the current economic situation are a couple who own quite a bit of rental property. They are talking about the next thing they want when they come to talk about the details of the current project.
OTOH, I spoke to the wife of a surgeon who has decided to wait a bit to order a smallish project. She said they just didn't know what the new president would do to the medical community.
It's hard to know when there is a lull in orders when in good times you might get one call a month that will give you two or three months work.
In no way has the current crisis affected my business the way that the 9-11 attacks and the tech stock crash of '01 did. I had customers calling to cancel orders then, and no backlog of work at all.
Ray
Ray that is interesting news about this recession and 911. My business here after 911 did not stop, slow down and no cancelations. At the tech stock crisis I had a record year as well. Last year was our first year down by 10%, but mostly because I differed compensation until this year. My landscape business has had 2 phone calls for new work. One is doing only half the job, the other can not get financing. I would guess that if some confidence is not restored that I will be out of business by June. We have cabinet shops closing by the dozens here, you can tell by Craigs list and the photos they post. Desperate folks here for sure, and most feel we have no construction recovery until 2011. There is a wave of arms coming due on the 1 million dollar homes this fall, and a large amount of commercial, strip centers etc that will be vacant and going to foreclosures as well.
I am thinking about an extended Mexico trip, and star in some Corona ads....:>)
Morgan <!----><!----><!---->
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Chris,
It is hard to imagine any restoration of confidence now that the "audacity of hope" has "changed" to crisis verging on catastrophe. Can't wait til passage of the all things to all people bill when happy days will be here again.
Ray
Ray, in todays paper here, a man who owned 43 rental properties(since 2001), had 40 of 'em sold in front of the courthouse yesterday.... 40 out of 43.... my brother has 6 and wishes he could unload 'em, but can't....
Butch
Butch,
Well I guess you can be upside down on your rental property's mortgage as easily as not. But where are all those folks who have lost their homes, mailed in their keys, living nowadays? I would assume they are renting, at least the ones that have a roof over their heads.
Ray
Ray,
Up here in The Great North Woods not a whole lot has changed. This area is and has been for many years what many describe as economically depressed. I do see a lot more pickups loaded with pallets, presumably for firewood to keep warm though.
Careers are few and far between unless you want to drive a truck, work in the woods logging or in a factory for 25 years and you might make it up to supervisor, if 30 others in front of you die.
It's basically been that way for as long as I can remember. Toughest thing is not to develop a negative attitude, commonplace for most folks up here. I refuse to be that way.
Gotta keep a positive attitude or yurl go nuts!
Regards,Bob @ Kidderville Acres
A Woodworkers mind should be the sharpest tool in the shop!
Ray ,
That is so interesting how 9/11 had more effect on your business then the current quagmire . To us out West in retail and the trades in general 9/11 was more like a speed bump , the whole country was in shock and the reactions were fueled by emotions . Know one was in the mood to go shop for new kitchens & reproductions , no we were licking our wounds in disbelief.
Here it was quiet for a few months but not dead no body had massive layoffs.
Our credit market was not upside down then and the housing market did not die like now , our banks had not started to show failures yet and G.I. bailouts had not been needed so the times were not bad before 9/11 . It was a sudden shock . Unlike the current situation which was a cumulative result of many factions .
So back to your client base hmmm ,, I do know what you mean about a visit or a phone call and how it can mean months of work , did yours come back to normal ? Things here are just turning around for me , better then the first month or so of 09'.
regards dusty
A little uptick here too. 3 orders so far as compared to 1 in Dec. and none in Jan.
Still way under capacity 3 orders is 15 hours of work or $1875 total overhead is $2k/mth.
Starving slower at least.
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Men will never be free until the last king is strangled with the entrails of the last priest.~ Denis Diderot
dusty,
I think that the tanking of the nasdac tech stocks had as much to do with it as the attacks of 9/11. A lot of my customers apparently lost their play money then.
Ray
Ray,
Just some thoughts.
Some time ago <Bush term(s)?> the Feds deregulated Wall Street <broad generalization>. Wall Street began looking for new ways to make money. Began selling ify mortgage related products and the banks were gobbling them up. Not sure of what happened next but we're seeing some of the results.
Now they're buying oil and trying to turn it over quickly - gas prices will rise again.
What's interesting to me is the impact on various regions/states in the U.S. Up here wood is dirt cheap, but getting anyone to harvest it is a challenge - good to know someone. If you're looking to add to your stash now's a good time to do that here. Real estate is a real buyers market but you have to have good credit.
I'm retired and chose to take early SS - took a hit there but figgered I'd better get my feet through the door while it's still there. Time will tell.
Regards, Bob @ Kidderville Acres
A Woodworkers mind should be the sharpest tool in the shop!
Wall Street began looking for new ways to make money.. Yep... we loose and they get rich!
My customers who seem the least affected by the current economic situation are a couple who own quite a bit of rental property.
Good one!
I have a very old Aunt that has lived in Hawaii for many years. On occasion we chat. Yes I call because she is cheap! All she talks about is how much she has to pay for upkeep and Taxes on her USA properties..
I do try to be nice to her anyway because she is family. NO, I am not getting any of her money. She is giving it away to some charity, not sure which.
As to the medical thing. My oldest daughter is a chemist with mostly medical (drug production/safety) background. She was cut back two years ago and finding it impossible to get work at a reasonable wage for her education and experience. She is currently testing paints at about 1/4 her past wages.
Mack, you make some good points. This is nothing like the Great Depression, and I wish folks would stop making that comparison. In addition to unemployment being higher than what we currently have for the entire decade (and peaking over 25%), lots of other things were far worse then. For instance, the stock market declined 90% in the first two years of the 30's, there was no unemployment insurance, and when your bank failed early in the depression (before FDIC), you lost every cent on deposit. If you throw in that little thing called the dust bowl, you start to get a real feel for the problems of that decade. The last time we had something like this was the early 80's. Unemployment was much higher then than what we have now, plus we had inflation to deal with. Inflation in 1980 was running at 15%. Paul Volker got that under control, but had to raise interest rates to do it. Prime rates hit 20% early in the decade. My first home loan in 1983 had a 16% rate. Compare that to 5% today. Some things are worse today, but on balance not enough to make this worse than 25 years ago. Folks just forget how things were with the passage of time. The crisis we face always looks bigger by comparison.Dave
"This is nothing like the Great Depression, and I wish folks would stop making that comparison." I suspect there's some fear it might get that bad. But you're right, what's happening now doesn't come close.
I'm one of those who has amnesia about the '80's -- probably because I was ensconced in a solid University job with no worries about employment. That aside, what's unique about this downturn is the sudden "off a cliff" shape of the plunge. From what I've read, that's a first.
I do remember the inflation, and how that enticed many to use their credit cards way beyond anything sensible. forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
Well I remember the 80'S We got married in 81 and the interest rate for a mortgage 19-21%. We were living in Edmonton and the laid off oil riggers came to town, Lots of bar fights, Lots of angery people if you had an out of province lisence plate you were fair game. The redneck menatlty .
We moved back to Regina were prices were more affordable and family matters. But Saskatchewan, Montana, Alberta, Manitoba and North and South dakota had a real drought, and grasshoppers. So for about 4 years the local agro community bite the bullet. Some dought assistance bit no real government help. My Dad had more than one friend commit suicide over this economic down turn. I saw the look on his face and that was horror. He still farmed but worked for the local Credit Union as a lender especially agro. It was not a real happy time. The term "next year country " was the phrase.So there are some similarities to these down turns, they may affect you some or they can take away a 100 years of family farm. If you have a good solid G job you are insulated from the life of the self employed. We who are flexable to expand and contract due to market fluctuation while, still trying to make the overhead payments of a shop and truck insurance et al. But who can live out the storm? Well again time will tell.But when things smarten up it is the private enterprise people who are willing and expected to step up to make it all happen. Reveal there own invenstment of infraststructure, and overhead and start hiring and buying.
I am sad to read that some suppliers are closing as this is another kick in the groin to economic re growth. The quickest way out is to turn guns into solar collectors and PV Panels, take the same technologies we use to put people in space, and fight wars. Use these for the common good. Make love not war! Don't you think in the year 2009 we could have learned to get along on the face of this planet?
"Don't you think in the year 2009 we could have learned to get along on the face of this planet?" Welllllll, if we had had some leadership in that area, maybe! Problem is, we've had a cowboy running our country for the past 8 years, "My way or the highway" mentality, "how do you spell n-e-g-o-t-i-a-t-i-o-n?" ahhhhhh Geezzzzzz, don't get me started. In the meantime, China's making all kinds of inroads into developing continents, and we're sitting here behind our Level Orange or whatever defenses, pmgfthwqy -- even at 90 wpm, I can't type fast enough to vent the pent up frustrations!!
Deep breath, let it out, paaauuuuuuuse, relax. It will get better in my lifetime, yesireebob.forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
Better be careful dear or they will take away your hammer..
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Men will never be free until the last king is strangled with the entrails of the last priest.~ Denis Diderot
"how do you spell n-e-g-o-t-i-a-t-i-o-n?" ahhhhhh Geezzzzzz, don't get me started.
In the meantime, China's making all kinds of inroads into developing continents, "
off the topic, but worth a reply... 1st, you can negotiate only with those who are willing to concede. most of our enemies will not concede anything.period. they want us, or our allies, gone from the Earth. you cannot enter into any truthful, lasting negotiations with this mentality. has it worked in Gaza? and it never will...that also applies to those fighting us in Afghanistan and those trying to take over Pakistan(who owns nukes!.. that's a frightful thought!)
as for China, they are facing the same problems that this country faced decades ago... their workers want better pay/bennies.. their people want cleaner air/water... so using China as an example is like using the old Russia.. they wanna grow in all parts of the globe, but that comes at a cost, sometimes an un-payable cost.
I'm late running out the door, so a quick reply here. The comment about China was in reference to how they are a steadily growing presence, especially in South America, gaining access to natural resources and participating in trade, developing positive relationships while the US lags behind.
I know there are plenty of conflicts and disagreements in t he world that seem immune to any talks or negotiations. That doesn't obviate the need for those skills and different creative approaches, participating in strong alliances without being the Big Boss Man, and carrying through with agreements we do make (see agreement with N. Korea which was precipitously abandoned for no valid reason).
forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
Dave HR
Sorry to jump in. I think it depends on where you are in the country and how bad things are for you. I have a contractor fren who has lost it all. He was talked into be the worker bee for a hot shot guy with bucks to remodel houses and flip em. He has been strung along and strung along through 2 houses. The liens are in place on the last one by the subs that were supposed to get paid, and they will get paid, and he will get nothing. He has lost his house, his wife & kids have turned on him. I am trying to find him some small work and get him going again, but truthfully, I just hope to keep him alive.
The Prez is coming to town, Phoenix is the 2nd worst hit area of the country, and we are really in tailspin. Lots of greed and crazy speculation on housing, and we have it coming as a whole, but not as individuals. Phoenix had 11 million at the last census. Today it would be a million less, and a lot would be migrants who have gone back to Mexico. Some areas of town have every 2nd house empty and vandalized for the copper. I wish we could really measure the true loss of jobs and unemployment here, we are at 9% now, but I think we are really down 20% if you count those who left and never look for work here.
My point.... We don't have statistics yet for this thing. It is just getting started with 3 sharp months of layoffs. It could level out and change, but I think we are on a run away freight train now. The landing could be a little rougher than you might think.
Hope you stay employed and healthy. Count your blessings and give a hand to those who need it. Whether they ask or not there will be plenty who do, and for them this will be the great depression.
AZMO <!----><!----><!---->
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AZMO,I couldn't agree more. There are parts of the country that are clearly more affected by this downturn. Phoenix, Las Vegas, much of California and Florida are suffering the most. And of course, the folks in Michigan would say they have never recovered from the last one. I'm not trying to minimize what you are experiencing, but just pointing out this is not the Great Depression part II, or anything close to it. I agree with the earlier posts that economic downturns are usually fed by public perception. If people are afraid, they spend less. That leads to fewer jobs and more fear. 24-hour news channels just feed the fear. It also doesn't help when our leaders use words like "catastrophe," or constantly throw out the Great Depression analogy in order to achieve their political objectives. Rule number one of political leadership is never talk down the economy because people will believe you and that will just make things worse.We'll get through this. We always have. That doesn't mean it won't be painful, and we definitely haven't hit bottom on this one yet.Dave
"If people are afraid, they spend less.."
That's true to a point, but most spending stops due to no extra disposable income. when a persons' home devalues to the point it's worth less than purchase price, no amount of "perception" will change that. his portfolio just got hammered, with the real possibility that he'll NEVER regain that loss. his disposable income instantly got ripped away from him... his fault or not, it's just as gone.same applies to those wanting new cars/trucks... mmanufacturers are offering never-heard-of deals on vehicles, and they're NOT selling... why? the car they were trading in just lost value,too...used car value is directly related to new car costs. and when the guy in the next cubicle just got his pinkslip last week, there's good reason for concern about your future employment. so forget buyin' that new ride...now, it's only buy whats' needed.. get personal debt down to where it SHOULD have been all along... and keep your resume up to date. the news only wants to kick up the negative, to be sure, as dirty laundry sells...like the song says. Not too long ago, the market was pushing 14K.. its' nearly lost 1/2 that. a correction? not hardly... along with 'credit" comes the "payment"... and now it's payment time for this economy.
Dave & All ,
When the one of the strongest countries in the world is 13 Trillion dollars in debt , there is reason to fear .
If a Million dollars a day was paid back since the birth of Jesus we only would have perhaps a few hundred years left to pay our debt off .
Obviously certain regions are affected more or less so far , and I hope those regions continue to prosper . It is true when we have less money we spend less , it is not a conspiracy to fail it is an automatic result for many . If more is not on the way how can the average person resume spending when income may have been cut or lost and opportunities are few ?
Some may be faced with tough decisions , especially for the elderly and the self employed who are simply out of business with limited or no income and no where to go and no benefits , welfare perhaps , health care all these things will cost our states and government more when some can't pay their own way.
Please if this is not real and some kind of ride or dream or just a joke or a false belief let me know so I can get back to work .
regards dusty
"---the crises we're currently in always looks worse by comparison---"
It's only human nature to believe our troubles are "the worst" ESPECIALLY when peoples emotions are being fueled by the fear mongering politicians trying to saddle us with world record debt as a means of getting their pet pork barrells approved.
It just does not make sense to me that you spend like a drunken sailor when you are in financial trouble. I would think you would spend LESS!! But that's just me.
I believe the economy will right itself by itself in spite of the politicians. My worry is the fall out, side effects and the unfathomable debt that is being created. Who's going to pay the bill??!!
Regards,
Mack"Close enough for government work=measured with a micrometer, marked with chalk and cut with an axe"
"It just does not make sense to me that you spend like a drunken sailor when you are in financial trouble. I would think you would spend LESS!! But that's just me.
I believe the economy will right itself by itself in spite of the politicians. My worry is the fall out, side effects and the unfathomable debt that is being created. Who's going to pay the bill??!! "
you're not alone in that thinking,my friend... the fallout will be brutal... the side effects are already being felt... and my grandkids' grandkids will be paying back the ridiculous amount of debt we've incurred. sad, isn't it?
To expect this to be self righting as a practical policy, without intervention, is extremely misguided, and flies in the face of decades of economic learning. Self correction might indeed occur, but at dramatic cost and requiring extremely long periods of time. The additional national debt is trivial when compared to the loss of wealth that has already occurred, and the additional loss that would occur without the stimulus. This is a stimulus package that would have better been passed in September of last year. My guess is that more economists who specialize in the macroeconomic business cycle would find the amounts too small than too large.
The bill will be paid out of the additional income and wealth created as a result of the stimulous. The costly choice is to not spend the money now, because not spending it means less income in the future, perhaps very much less income and for a considerably long time.
This is a case where what is the right thing for an individual to do in times of adversity doesn't provide a good guide for what should be done collectively--in this case through government.
Edited 2/16/2009 9:19 pm ET by SteveSchoene
To expect this to be self righting as a practical policy, without intervention, is extremely misguided, and flies in the face of decades of economic learning.
If we could get out of trouble by spending explain how there has ever been a down cycle? Government could simply spend and no issues. It does not work
Self correction might indeed occur, but at dramatic cost and requiring extremely long periods of time. The additional national debt is trivial when compared to the loss of wealth that has already occurred, and the additional loss that would occur without the stimulus.
TRIVIAL? My God man, they just took out credit cards in the names of Grand children who have not even been born yet!
This is a stimulus package
That bill was a lot of things but stimulus it was not. Stimulus means short duration targeted. Our gov't did not even read the thing to see what was in it. It was discracefull. We have abandoned our capitalistic ways for socialism. This was about the Democrats long wish list and power grab for the Fed Govt.
that would have better been passed in September of last year. My guess is that more economists who specialize in the macroeconomic business cycle would find the amounts too small than too large.
The bill will be paid out of the additional income and wealth created as a result of the stimulous. The costly choice is to not spend the money now, because not spending it means less income in the future, perhaps very much less income and for a considerably long time.
Oh you will have less income for sure. Wait for hyper inflation in a few years.
This is a case where what is the right thing for an individual to do in times of adversity doesn't provide a good guide for what should be done collectively--in this case through government.
Funny you used the word collective and Govt in the same sentence, but appropriate. I do have some advice Buy some Gold!
I'm sure this will probably be moved to the cafe' and maybe that would be best. Let the fleecing begin!
Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
The last official act of any government is to loot the nation.
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Men will never be free until the last king is strangled with the entrails of the last priest.~ Denis Diderot
Steve and Don, wow you guys aren't even old yet, and here we go with the End of the World as We Know It. I shall remain concerned, yeah even worried, but optimistic in the long run.
forestgirl -- you can take the girl out of the forest, but you can't take the forest out of the girl ;-)
Well, it is in large part why there haven't been major down turns since the Great Depression. It does work, not perfectly, but it does work. It would work better if there weren't so much lack of economic understanding that makes the solutions so political and difficult to achieve in a timely fashion.
A large part of the bill that was passed is based on tax cuts. Larger by far than I would have preferred, since spending has more bang for the buck, sometimes much more, than tax cuts. Tax tax cuts can be enacted more quickly, which could be significant. Any spending will be stimulative--it is not true that some spending stimulates and other spending doesn't. There may be small differences in the ultimate multiplier for different spending but those difference are likely to be small and are certainly not knowable without scientific empirical research. The major differences among projects are timing, and that can be important as well.
If the primary criterial were "short term" then the best stimulous would be to hire folks to dig holes and then fill them up again. It would increase incomes. But, the harm from doing that are in the long term. It is better to hire those folks to start doing things that need to be done in the long term--that are investments, not just make work.
I don't see fundamental change toward toward socialism in the stimulous package. Where there may well be some greater change coming is in financial system reform, since we now, still have a financial system that is disfunctional and needs to be put on sound footing and regulated in ways that prevent the reoccurance of the recent collapse. Parts of those changes are still very mysterious since very few people really understand the financial intruments that pulled us toward the current mess. The fiscal stimulous package is mostly a way to give us time to do the massive financial system restructuring that is needed.
But trying to understand the current economy and policy options through the lens of ideology, of either the left or the right isn't very helpful. What is needed is hard headed economic science.
Edited 2/16/2009 11:00 pm ET by SteveSchoene
Steve,
I wish I had your optimism regarding those hard headed economists. Firstly, if all the economists in the us were laid end to end, they would still point in all directions. (An old saw, but still true) There is only consensus among those economists who agree :-)
2dly, putting Paulsen then Geithner in charge of the problem is not gonna be particularly helpful. Primarily because the mess is so convoluted that even the one man in the world who "understands" it doesn't know what to do first to unravel it. But taking one of the foxes out of the henhouse and putting him to work in reversing the loss of egg production isn't going to be productive. His focus isn't on the real problem- too few hens- but on trying to make a few good eggs cover up all the rotten ones.
Weeding out the worthless paper that is clogging the financial institutions is going to be a bitter pill to swallow. And it is going to give a world class belly ache. I can't see that any amount of smoke blown up any orifice can make that go away. Sure hope I'm wrong.
Ray
Unfortunately, I think you are somewhat right about optimism since the circumstances that "brung us here" are relatively dire in terms of the revealing the fragileness of the financial system. I'm only saying that this means we must take action, it's not the sort of minor wobble that puire market forces can be relied upon to "handle."
Yes, I understand the problem that not all economists point the same way, but in the circumstances I'll bet that there is a much greater consensus about the broad concepts than you might imagine. As Milton Friedman once said, many years ago, "we are all Keynesians now" With the risk free interest rates nearing zero, fiscal policy becomes more important as a policy instrument.
I'm not sure I would characterize Geitner as quite being one of the foxes, but even so, the first step toward increasing the number of hens, IS to get rid of the foxes, even if that means putting them to work. And, it is going to be necessary to put people to work on the solutions who do understand the way around the hen house, which at the least means that they are likely to have known a lot of foxes.
I think you are right that sorting out the bad paper is going to be a challenge, and force changes in the banking system that would otherwise been unthinkable. But, in the end, if the "real economy" can be stabilized, the toxic paper becomes much less poisonous, since to a degree the complex leverage that made the downside so low, can work as an antidote to return health to the paper.
In the end, the regulatory framework for the financial system has got to change. I think it will have to be along lines that makes public much more of the sausage making that goes on inside. The rule bound system that arose in the 30's did prove not very efficient--that's part of why it was dismantled, and also circumvented, but unfortunately not replaced with the light and fresh air needed to keep the system from going astray. There is always a new way around any set of "rules", we need disclosure and principles, not just rules.
1st... as complicated as many wish to make this(and it may be), the solution is as easy as running your home finances.If you have too much debt, stop making more, pay down what you already owe. you must ALWAYS strive to have surplus $$ left over every payday, even if that means not getting want you "want" as far as non-essentials go, or selling items to get your head back above water. For our Gov't, that means stop importing goods at the rate we are. if the other countries don't like it, tough. It also means that everyone pays their fair share..no exceptions. make illegal immigrants relocate to another country...they are taking american jobs and taxpayer dollars in services, neither of which we can afford any longer... with the economy like it is, people WILL do meanial tasks for a paycheck.if 5000 people stood in line for 500 summer amusement park jobs, they'll do whatever they need to do. It may well be that the Gov't may hace to unload some of it's assests as well...whether that be gold/land/whatever... they have to get square with the Accountant like everyone else.
since the Automakers are getting taxpayer $$, give 'em 5 years to totally eliminate fossil fuel motors. we can walk on the moon, we can get off oil for gas. we HAVE the echnology now, it just needs tweaked. tell 'em to get to tweakin'!!
here's another... empty all the prisons' out..put 'em on a plane bound for the hottest war zone. they can have their freedom, if they survive the war.good luck and shoot straight.no extra bennies like GI BIll, you are paying Americas' society what you owe. I realize some of these seem ridiculous, but money is gonna be money from here on out. anywhere Gov't spending can be cut..cut. it's gonna be like pulling teeth, but once it's all over, the better the body will be.we danced as a nation, now the fiddler wants paid... and if we send the message that our signature(Gov'ts) on a promissary note is worthless, we're in more than financial trouble.
I wish it were so simple that government should act as families as far as budgets, but it just isn't true. When large numbers of people no longer spend, either because they lose confidence about the security of their future, or because they have already lost jobs, the effect is that more goods go unsold, more businesses fail or must shrink and there is further loss of income and therefore of spending. There is a downward spiral of income and employment. The adjustments of wages, prices and profits that might, theoretically, correct the unemployment are very slow in coming and unemployment could continue for a socially unacceptable long time. Everyone trying to be "prudent" makes things worse for everyone else, and quite possibly for themselves going forward.
So, what has to happen. Spending must increase so more resources can be employed. But, as you point out, it doesn't make sense for individuals to take those risks of borrowing to spend since unless a great many people do the same thing, it would be very risky. You can't be sure others will do the same. So, if individuals can't rationally step up, it requires another agency. In this case government. Government, which after all is just the action of all of us, can begin the process of spending. This be direct as when governments let contracts to build roads, or schools, or alternative energy projects. Government can also cut taxes. Cutting taxes isn't quite so effective, since not all of the reduction in taxes will be spent--some will be saved or used to pay down debt--it can be usually started more quickly.
Deficit spending when there are significant unemployed resources, actually has little cost--why, because it prevents the sheer waste caused by unemployment, where if resources--labor and plant capacity--go unused, the goods and services they would have made can NEVER be recovered. Sure future generations may have to pay taxes to finance the debt, but they do so from wealth bequeathed them that might never have been created if unemployment were not reduced by the deficit spending. Cutting government spending now, just gives all of us less in the future.
By the way, I'm very proud of our young men and women who go in harms way for their country. They do so by the stint of very hard work becoming professional soldiers, sailors, marines, or airmen in the finest military in the world. I sure wouldn't want to endanger them by giving guns to our inmate population.
Isn't it amazing that we are all asked to do with less and suffer for the cause and Govt can't possibly do with a nickle less. Oh excuse me I was wrong, they have asked Defense to give back 10%. Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
over-spending is why we're in this situation..spending more is pure folly. as for the unemployed, had business thought more of their workers than profit, tey MAY still be working., instaed, the companies move factories to other countries, outsource instead of keeping workers on the job..why? not enough profit. that's the ugly side of Capitolism,palin and simple. CEOs making nauseus salaries... investors( many foreign) want $$$, or they'll move that $$ to another area. as a Gov't employee, I see the WASTE..daily. that must stop.
"Sure future generations may have to pay taxes to finance the debt, but they do so from wealth bequeathed them that might never have been created if unemployment were not reduced by the deficit spending."
that wealth has not yet nor may not EVER happen,seems to me you're counting your chickens before they are hatched. thats' called "gambling", and not sound financial practice,IMHO
as a vet, I say pull the "honorable" men/women out of harms way, and put those less"honorable" there. no sense in losing the cream of our crop, when we have plenty of milk to spare.
By the way, I'm very proud of our young men and women who go in harms way for their country. They do so by the stint of very hard work becoming professional soldiers, sailors, marines, or airmen in the finest military in the world. I sure wouldn't want to endanger them by giving guns to our inmate population.
Thanks, its nice to hear.
Steve you're answering a bunch of tough questions. Good Luck.
As a former "zoomie" taking off in a flight of 4 with enough ordinance to .. cause problems, I didn't want any convicts on my wing going in harms way. When taxpayers say things like "send criminals" to your squadron, I'm pretty sure of one thing... they have never had their pucker factor at 10. That means slammed shut with fear for the uninitiated toads who think commitment, dedication and training are just ideas. Get a grip.
dan
"As a former "zoomie" taking off in a flight of 4 with enough ordinance to .. cause problems, I didn't want any convicts on my wing going in harms way. When taxpayers say things like "send criminals" to your squadron, I'm pretty sure of one thing... they have never had their pucker factor at 10. That means slammed shut with fear for the uninitiated toads who think commitment, dedication and training are just ideas. Get a grip.
dan "
true, but Dan, your wing isn't the only ones in a hot zone.True? in fact, your wing is a verrrry small part of the total troop involvement. leave the high tech services to those qualified,for sure, but criminal(and all branches already have 'em) CAN be sent to REPLACE...key word REPLACE, troops on the ground. I see no reason to house/feed/clothe/medicate/etc, these people when many honest people don't even have that much available to them.
Here are some convicted criminals, "convicts" as you put it. Wanna ship em off to be cannon fodder? And in regards to your comment on immigrants I take it you must be a native american and not the spawn of some immigrants that came over here uninvited and comitted genocide on the original citizens.
Denver: Three American nuns who were arrested after protesting at a military facility in Colorado have been sentenced to jail, a news report said. The nuns, aged between 55 and 66, were on Friday given sentences ranging from 30 to 41 months. They could have been sentenced to up to 30 years in jail. The prosecution had sought a sentence of six years. The nuns were found guilty in April of painting crosses with their own blood on missile silos to protest against the war in Iraq. They were found guilty of interference with national defence and causing damage of $1,000. The nuns, who belong to a peace activist group, broke into the silos in Colorado last year. The nuns said they had received thousands of letters supporting their action. Peace activists have called for a demonstration on Saturday to protest the sentences.
Put a rifle in their hands and ship em off to fight for the american empire eh?
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Men will never be free until the last king is strangled with the entrails of the last priest.~ Denis Diderot
1st...Nuns are NOT supposed to mind political issues. they are to mind Godly issues,following the Good Book's teachings. nowhere in Jesus' teachings does it say to uprise against your leaders, or take up arms against the Gov't.
2nd...I'm more concerned about THAT, than their actual braking of the Law.Seperatiuon of Church and State works in BOTH directions.I'm also wondering why the Vatican didn't release a statement on the situatiuon(if they did, I haven't read/heard).
Religion has nothing to do with it. They are convicted criminals. You are paying to feed and house them in prison.
Put a gun in their hands and ship them off to war? Will they make effective soldiers? Who else? Prostitutes? Johns? The guy doing life in Texas for a joint? The cop who forgot his K9 in the car on a hot day? Corrupt politicians?
All the mentally ill we have convicted and put in prison? Ship em off to war with a rifle and some grenades?
Have you so little regard for the women and children of the nations we are attacking? What would you think of a people who invaded your country and knowingly sent rapists and murderers as front line troops? How would you feel when they blew in your front door and confronted your wife and children?
Have you no regard for human life? No morals no common sense? Or is it OK because they are not americans, not the same religion as you, not the same color or whatever?
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Men will never be free until the last king is strangled with the entrails of the last priest.~ Denis Diderot
the regulatory framework for the financial system has got to change
Uh, I think that has an awful lot to do with at least one cause of this mess. One part of the changes that were made was the deregulation of investment some of those controls if I'm not mistaken. If so, I stand corrected.
Gee, I wonder when that happened?
Regards,Bob @ Kidderville Acres
A Woodworkers mind should be the sharpest tool in the shop!
I believe that repeal happened under Clinton. It really does'nt matter, both parties are so crroked they have to screw their socks on in the morning.
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Men will never be free until the last king is strangled with the entrails of the last priest.~ Denis Diderot
"In the end, the regulatory framework for the financial system has got to change."
___________________Considering how much of an ownership stake the US Government now has in larger players in the US financial structure, and the strong possibility that more "investment" will probably be required, it's not unreasonable to say that the US banking system is being nationalized. That's a term that will stick in many folks craw but I don't think it's too far from the truth. Ron
Fear of the nationalization of the banking system is one of the reasons the stock market continues to tank even after the anointed one put the the old sig on the pig. Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
Bones,You will see things exactly as you want, but have some trust in our Constitution before crying socialism and the end of the USA.If the last guy couldn't bring our government down, I don't think the current guy is going to.Bush is a Fascist, Obama's a Socialist. Uh-huh. If anyone believes either of those just realize you aren't in the middle with the majority of the country but in the outer reaches; may not be a wingnut but you can see them from where you are.I just hope those in the middle realize we have enough common interest to work together to get us out of the current situation and headed for better times.
Bones,
You will see things exactly as you want, but have some trust in our Constitution before crying socialism and the end of the USA.
There is nothing done that cannot be undone, but the amount of pain to get there will be severe. As to the Constitution, very few in DC relish that document much anymore.
If the last guy couldn't bring our government down, I don't think the current guy is going to.
Bush is a Fascist, Obama's a Socialist. Uh-huh.
Bush is Hardly a Fascist, but then he was not very conservative either i.e. the drug program. Obama is so far left, it almost makes me wish for Jimmy Carter again. Oh wait, it is Jimmy (You could substitue Hugo in there they see eye to eye on a lot).
If anyone believes either of those just realize you aren't in the middle with the majority of the country but in the outer reaches; may not be a wingnut but you can see them from where you are.
The middle is no where near where we are going!
I just hope those in the middle realize we have enough common interest to work together to get us out of the current situation and headed for better times.
I am a firm beleiver in our ability to recover. We did it befor and we did it again. Spending is not the way to get there. It will prolong and intensify the hurt.
I'm more concerned with other provisions like eliminating the gains with the welfare reform in 96 that Clinton always crows about. We are turning back the clock.
Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
Bones,I can see both sides of the spending vs. tax issue. I think it is situational.In the current situation, reducing taxes isn't going to jump start anything. Over taxation kills a GOOD economy. Tax breaks don't induce hiring.Spending is a resuscitation device and warranted in this situation. Pork and frivolous spending isn't the answer but if it is directed to infrastructure and reduction of dependence on foreign sources of energy I think we'll be better off down the road.In shop terms its maintenance during a quiet period so you're ready when business picks up.Tax breaks to help the current economy is akin to a doctor telling a patient having a heart attack, "Eat less bacon." I want the doctor that uses a defibrillator.But then I'm a woodworker, not an economist. I want the economist to come to me when they want furniture or cabinets; not for solutions to this recession.
Bones,
I can see both sides of the spending vs. tax issue. I think it is situational.
In the current situation, reducing taxes isn't going to jump start anything. Over taxation kills a GOOD economy. Tax breaks don't induce hiring.
WRONG. You want fast stimulus, let folks keep more of their own money (what a concept). You could have given folks (those that pay taxes) a holiday from taxes and put money instantly into the market. Cut capital gains or eliminate it (that would fire things up on the street) Cut the corporate tax rate in half! Across the board freeze on all govt spending excluding defense. Real fast stimulus.
Spending is a resuscitation device and warranted in this situation. Pork and frivolous spending isn't the answer but if it is directed to infrastructure and reduction of dependence on foreign sources of energy I think we'll be better off down the road.
Won't work fast. Alot of the few items that are infrastuture does not occur for a long time. Secondly it will go to states to decide and they will take time.
In shop terms its maintenance during a quiet period so you're ready when business picks up.
In shop terms, you don't go out and increase your spending 80% when you don't have any business lined up with a credit card with 21%
Tax breaks to help the current economy is akin to a doctor telling a patient having a heart attack, "Eat less bacon."
Nope this the Doctor going I'll need you to sign a contract that your Grand children will have to pay times 10.
I want the doctor that uses a defibrillator.
The gov't with this bill says wait lets see if you deserve to live and then we will tell the Dr. if its worth saving you!
But then I'm a woodworker, not an economist. I want the economist to come to me when they want furniture or cabinets; not for solutions to this recession.
Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
Bones,I understand your viewpoint, I simply disagree. I think your positions might work on the village scale but not for a diverse nation of 300 million or so. I can't really tell if they are Libertarian which I get or Anarchist, which I don't. But we don't have to see things the same to benefit from this woodworking forum.I think the policies you advocate would leave a country so weak that eventually we would be unable to influence world affairs. Kind of a throwback to pre WWI USA. Well, no turning back the clock; and who would want to?One of the coolest things about the forum is I kind of imagine it as a huge communal shop where we get to share techniques, knowledge etc.But just like a big shop there are just some things we won't see the same and have to just accept we look at the same situation and see very different things. I think we both are glad the other isn't in charge of setting policy for the United States.Now do you know anything about blocklaid lamination? I'm gearing up to do this technique for the first time. Unfortunately I can't figure out any way to do it without SPENDING time laying it out and I've found it pretty TAXING.Cheers.
Been reading this discussion for several days now, popped in for a few words and quite frankly am not sure what to make of this mess we've gotten into. It's easy to point fingers at the cause(s) as there are many; surely mor ethan we will ever know.
What gets my goat is listening to the news about all this and then I see the Postmaster General just got a generous raise and bonus putting his salary up around $850,000 a year. Guess he must be small potatoes as the CEO of FedEx (?) made $9,000,000 last year!
I don't know about you but to me that sure makes swallowing the pill of more debt somewhat discomforting.
I fear I'm becoming another dang cynic,Bob @ Kidderville Acres
A Woodworkers mind should be the sharpest tool in the shop!
I understand your viewpoint, I simply disagree.
Right back at ya. With that my friend we shall bring the evening to a close and have fun and make some sawdust!Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
"TRIVIAL? My God man, they just took out credit cards in the names of Grand children who have not even been born yet!"That would be about $800B added to the $5T of national debt increased over the past 8 years.
"TRIVIAL? My God man, they just took out credit cards in the names of Grand children who have not even been born yet!"
That would be about $800B added to the $5T of national debt increased over the past 8 years.
Check your math! Thats the principle. This aint GM with 0% for 2000 years! Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
"TRIVIAL? My God man, they just took out credit cards in the names of Grand children who have not even been born yet!"That would be about $800B added to the $5T of national debt increased over the past 8 years.Check your math! Thats the principle. This aint GM with 0% for 2000 years!
________________________Actually, considering treasury securities are returning essentially 0% that's about GM's rate.
The so-called stimulus will accomplish what the politicians have in mind....
Save goverment jobs at all levels.
Expand government at all levels.
Increase taxes to spend on wasteful projects to buy the politician local votes at the next election.
Increase dependency on the government to garner the politician new votes.
What the stimulus won't do...
Save your job, unless you work in construction (maybe) or for the government (your safe!).
The only way to save jobs for those who pay taxes and do not work for the government is to promote business.
Steve,
Thank you taking the time to explain our economic situation. I concur with most of it, while I see some pitfalls that are looming, that quiet my optimism.
I heard an interesting term yesterday for BofA and Citi Bank. Zombie Banks. They are so debt ridden and overwhelmed in bad paper that they are dead banks. Walking around dead and unable to make loans and therefore unable to act as Bank. The Tarp funds they received are being held to cover bad paper that will be coming up. The new mortgage foreclosures on Jumbo Loans, 1 million plus homes, starts this fall. Also coming is the commercial property paper, failed subdivisions, strip centers, condo projects, office condos etc. This is just starting now and will gain momentum as well. Many small banks won't touch Tarp funds, the strings attached mean they must make loans with them, and there are few qualified places for placement.
We really need to take some of the Banks, GM etc to chapter 11 and reorganize. This means the shareholders of these firms take a bath, and the asets, (bad paper) have to be written off and these firms restructured. Until this happens, I see no way for a significant recovery. We have to find a bottom to recover, and I don't see November as our bottom.
Morgan, hoping to be optomistic!
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I agree that the financial system must be functioning for a "real sector" economic recovery to be sustained. Ideally, fixing the money sector should be done first.
But, I'm not at all sure that bankrupty is a desirably route to achieve that. My concern is that bankruptcy of such major institutions is likely to have a dire effect on the banks various liability holders. Depositors insured by the FDIC are only part of those, and bankruptcy operates by letting certain liabilites to be paid off at cents on the dollar, damaging other parts of the financial system that had provided financing for the banking system.
Bankruptcy doesn't restore any value to the bad assets that are bringing the banks into insolvency. If fact, it may do the opposite. I have spend a fair amount of time trying to estimate values of the assets of companies in bankruptcy (though bank valuations weren't part of that) and can attest that in general asset values drop in bankruptcy, and those values plummet when those bankruptcies involve liquidation. In bankruptcy the worst case valuations routinely become the realized valuations. Bankruptcy is too crude an instrument and could, I believe, too damaging to the economy. Sure, it satisfies our primative urges for "revenge", but I'm afraid at too great a price.
Consequently, I suspect a more subtle, and more complex form of resolution to the ills of these banks will be required. It may require some things that look rather like nationalization with government guarantees of libilities and bolsters to assets whose values are clouded. But, never having worked as a bank analyst, or been a senior bank manager of a money center bank, I'm not at all sure of the form this resolution must take. This is an area where I don't think there are answers that can be devised other than by very smart people who also have professional level training and experience in the area.
Solutions to the banking system ills are not things that taking recourse to ideological or political based "truths" will be of any benefit, and will be more likely than not to lead us astray.
Steve,
Thank you for the reply, your understanding of the issues far surpasses mine. I had not examined the decreased assest value brought on by bankruptcy liquidation, nor am I familiar how banks write off bad debts. I wonder how bad the B of A ledger is, the total value of bad debts, and what is the real value of the bank holdings? I suspect if I really knew I would be sleeping less.
I would like to share your view that there are some smart people who specialize in this resolution. I just hope their skills are better than the SEC's handling of Madoff.
Morgan <!----><!----><!---->
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This has been an incredible thread from beginning to end. Sorry I can't bail us out with the right answer, but I have some feelings I want to share. First, concerning the view that if we all ignored the situation it would go away. The view was pretty much ignored, but I have some sympathy for it. For me it translates to mean reduce the amount of exposure to media and be very selective in what one listens to and even more selective in what one believes. Another point is that we should all spend and build up more debt to get us out of it. I resent this view personally. Bad debt, greed, lack of accountability and a dysfunctional, unresponsive system has caused the problem imho. The last thing I would want to do is perpetuate or bail that out. It would also be irresponsible of me as an individual not to take heed, pay down debt, and be responsible in how I spend. There is just something wrong with someone telling me to spend my money to perpetuate a system that obviously has problems with the way it runs. It is up to people who have created the problem to give those of us who haven't evidence that they (Government, Wall Street, Industry, especially oil/auto related.) will deal in good faith and are implementing something that can work or is worth keeping. Asking me as a consumer to spend without the above sounds like some kind of scam. I believe macroeconomics is more of an art than a science (obvious personal bias, no doubt, but sincere for all that). I haven't seen evidence it works very well, maybe post hoc. Finally, I hate the idea of how the little guy (come to think of it that's me too) gets hit with these events. I always have the feeling that the wrong people are suffering... Hope no one here is hit too bad. Just wanted to get my $0.02 in, probably about what it is worth too...fred
"It would also be irresponsible of me as an individual not to take heed, pay down debt, and be responsible in how I spend."
While this sounds good, and has overtones of morality (Benjamin Franklin adages like be neither a borrower or a lender, this attitude by a large number of the population will absolutely ensure a 2nd great depression, and possibly worse. The extreme irony of this situation is that I've talked to a number of individuals on my block that have flaty stated that the are holding on to their cash, and not even buying essentials like clothes for their children when they've outgrown them, in the hopes that they can "ride it out". What I've told them is that this will absolutely ensure that they eventually lose their jobs as well. You cannot save your way out of ruin unless you are very, very wealthy. That doesn't mean you should empty your retirement account to go buy a new Ferrari, but witholding necessary expenditures is just prolonging the inevitable.
"Neither a borrower nor a lender be" is actually from Hamlet by William Shakespeare.
"Neither a borrower nor a lender be" is actually from Hamlet by William Shakespeare."
Ahh - thanks, I couldn'treally remember and was too lazy to look it up on the 'net. Those quotation searches are interesting. I'd always thought that "the bitterness of poor quality is remembered long after the sweetness of a low price fades from memory" was something Ruskin said. Turns out it's Aldo Gucci - if that's the same person that started the Gucci women's accesories line, his quotation makes perfect sense.
There are some mild moral overtones behind my advocating we should be responsible in spending and using debt. It is morally better to pay your own debts and not get someone else to do it for you, too. Like any moral stance, however, it is easy to go too far. Saying one should never be a lender or borrower is going too far. But the idea that it is important to feel the gravity behind the acts is a good one. It's sort of like the difference between borrowing to make a reasonable investment and leveraging things beyond all ability to pay. Not buying essentials is going too far as well. Frankly, I worry about the people who can't buy essentials, not those who quit buying them. What really gripes me is the idea of spending to shore up a system or some government employees program or some economist's bright idea. The view we should spend our way out of things can take on the luster of a moral imperative too, and soon it starts sounding as if it is our responsibility to spend. I really do have the feeling such advocacy is simply a scam to either keep things as they are, so that those that got us where we are can keep benefitting, or it is an honest view that is naively playing into a system that works that way.
I meant to say before, that the current recession (?) hasn't affected my woodworking at all, which is the answer to the question posed at the beginning. Also, I really did need the dado blade set I just bought with my Visa card and I'm sure I will pay Visa at the months end...honest!! Is it true that Japan is the richest country in the world right now and is among the highest in the world in the rate of personal saving, if not the highest? Hmmmmm...
Japan's recently reported a GDP decrease at a 12.7% annual rate. Japan is a long way from being at the top of the list for gross domestic product per capita. Somewhere around 20th and a bit behind the US. Approximation is all that is possible, because making international comparisons of income are very difficult, with about as many estimates as there are estimators. Wealth is even more difficult to compare, with a great many components that aren't traded internationally. The US generally ranks higher on wealth comparisons than on income comparisons.
"There are some mild moral overtones behind my advocating we should be responsible in spending and using debt. It is morally better to pay your own debts and not get someone else to do it for you, too. Like any moral stance, however, it is easy to go too far."
While I certainly got similar lessons from my grandfathers (both of whom lived through the Great Depression), and I don't necessarily disagree with the idea, the result for the people of the US as a whole if everyone holds onto their money and only buys the absolute neccesities will be utterly disastrous.
Much of the world's advancement in standard of living in the last 100 years has been the advent of credit being extended to the masses (and small businesses, which have invented much of the new technology that's responsible for that rise in the standard of living). Without it, we would likely still have most of the population living on tenant farms. That's not to say that completely unregulated advancement of credit is a good thing, but having the pendulumn swing all the way in the other direction is just as bad.
Morgan,
You wrote: "This means the shareholders of these firms take a bath..."
Actually, the shareholders of most of the "zombie banks," as you put it, have already taken a bath. With Citi and Bank of America, the value of those stocks is very near zero right now. Having the Feds take over the banks won't amount to very much more loss to shareholders.
I don't know the answer to all these questions. Everything's too complicated for me lately..
ZoltonIf you see a possum running around in here, kill it. It's not a pet. - Jackie Moon
Zolton,
Way to complicated for sure. It is one thing to have a stock devalue, it is quite another to have it replaced with a new issue. If it is devalued, it should and probably will turn around and come back to some new level. If it is completely replaced by a new issue (check out airline stocks, like America West from 7 years ago) then it has no value, and never will. That was my small point.
Morgan <!----><!----><!---->
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Are you lucky, or just smug.There are twenty homes on my road,11 of these homes the wage earner is unemployed. A few months ago they were working full time and in some cases overtime.
In my opinion this "recession" is a depression in many areas of the USA.This is from an old retired carpenter who is fortunate not to have a mortgage. Pretending every thing is rosy is akin to sticking your head in the sand.I am worried, for my grown children and my neighbors and friends.
mike
Careful now Mike ,
You could get labeled as someone who is pretending things are really worse then they are and just another Wolf crier .
I really am glad we are allowed to think as we please
But ,
" it's too bad ignorance is not painful "
d
I for one have changed my buying habits because of the economy.
This thread got off topic before it really even started…
I’ve been thinking about your original post. I may be slightly more optimistic, but I believe that this downturn could be beneficial for us as woodworkers.
Any downturn will force us to correct wasteful habits. Like you I’ve been searching out more deals, and I’ve been much more patient with purchases. Lumber is expensive as well; it never hurts to plan ahead a bit more to reduce waste. Further I plan to spend more time developing ‘real skills’ rather than blasting through projects with machines. Less projects (and less wood), but more enjoyment and better results (I hope).
Secondly the downturn will force others to correct their wasteful habits. Hopefully this will reflect into a better understanding of the value of a dollar, and the value of things around them. Perhaps this will lead to a higher value being placed on labor and craft?
Finally people will be focusing their priorities. They will be selling unused and excess equipment and lumber. There has been, and will continue to be some great bargains out there if you keep your eyes open.
Wineman,
Yes, my buying habits have changed. I usually buy wood wholesale in quantity. As my side business in wood has been slower, I've been buying wood as needed only. I have delayed tool purchases as well.
The local wood suppliers are keeping limited stock only. They will order anything I need, and get it to me in a few days. But I can't go pick through a pile of wood in their woodracks now.
Though I know the rising US dollar is most likely at fault, but I couldn't believe that Festool just had price increase. Maybe in some way it's good business. But this customer isn't very happy with them right now.
Winemane,
"Like you said bad times affects ones priorities, we learn to live in the moment. When one has less discretionary monies we tend to lessen our level of need and we find that we have enough."
I'll take that one step farther, I think we begin to understand how high on the hog we were living, the price we were paying and, in some cases, realize it wasn't worth it.
Amen Derek.
I can't help but feel that the only sign of a recession that I see is the media's statement that it exists and peoples individual reactions to that news.... Of course, if you live on credit, and lenders tighten the credit market, then it could easily "feel" like a recession anytime they say you can't have credit anymore.
I can't help but feel that if everyone turned of their TV and lived within their means there wouldn't be a recession at all.
:)
gerald,
Since your profile is not filled out I would think you could be located in a different country other then the U.S. or a different planet perhaps .
So If we stop watching the T.V. and listening to the news there would not be a recession at all .
I realize some areas in the U.S. as well as some areas in other countries still have some commerce taking place but with banks folding and a little company called Lehman Brothers for example dropping like flies and the housing and MFG sectors with closures and massive layoffs your view on what it would take to fix things is interesting but malarkey .
Not to compare one to another but some folks to this day do not believe the Holocaust existed , some may like you believe the problem can be avoided simply by not believing in it .
To you my friend you are in Denial and that's a big river to run keep your dry side up
Is it not that way in America?
I would say hardly ever was!
We have those huge, high speed, printing presses that work 24/7 cranking it out!
Wow, you're quite the detective.
So this is how you handle discussions on a woodworking forum? You "investigate" those that disagree with your viewpoint.
I like to think of the Knots forum as the shop floor or an internet woodworking club and I can't imagine someone bringing documents of someone else's political contributions to the shop floor or group meeting. If this were "real life" the looks from your shopmates after such behavior would get the point across more than any comments from those that would say something.
A little creepy.
Wanted to add that I didn't click on the link, I have no idea if that list contains contributions to a PAC, candidate, whatever.
I did click on Samson's profile to see how much he/she wanted presented to this forum. Didn't see anything that listed contributions.
We are not on the floor of the legislature trying for the "gotcha!" and I don't see how posting that information contributes to the spirit of Knots.
Edited 2/27/2009 2:01 pm ET by adastra001
Edited 2/27/2009 2:45 pm ET by adastra001
I have removed the message as no offense was intended.
Well, my apologies as well. Hit a sore spot with me after the political season, the perception that anyone that disagrees with another is "the enemy". That may not have been your intention but I guess I was primed to take it that way. I really hope with the current economy and state of our country we take the time to remember we are Americans first and we have some work to do.I know we aren't going to all hold hands and sing "Kumbaya" but I know that guys I really might have disagreed with occasionally in the shop I still respected them as good woodworkers and we could usually find things to laugh about.
I agree with you, Ada.
"I really hope with the current economy and state of our country we take the time to remember we are Americans first and we have some work to do."
well, MOST of us are Americans, but there's too many that are NOT citizens. if they wanna be Americans, fine, do it.I'll welcome you with a warm handshake... but I have a problem with those who just want what we have to offer w/o commiting to the country, and becoming citizens. it's like they want to be fence riders, or something. and I don't really think that anyone knows exactly how many MILLION there may be.
edit to add: if someones' not helping with the solution, they're a part of the problem.regardless of the amount that might be, at this time in our history ,ANY part is too large.
Edited 2/27/2009 3:58 pm ET by ButchE
Butch,Right, I forgot this forum isn't just us American citizens. But I think its cool we get the perspective of some folks from other countries here.But as far as immigration, there are a lot of political forums that cover that issue. Other than what someone from another country thinks about American woodworking seems like a stretch for a woodworking forum to get into immigration.Immigration threads get ugly pretty quickly, probably best to avoid dragging that in.
Butch leave the immigrant issue alone, there are more sides to that story than you know. This is the Ecomomy and Woodworking and the imported lumber and manufactured wood products ala Ikea, Wally world etc represent more danger as a nation of consumers and not producers. <!----><!----><!---->
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"Butch leave the immigrant issue alone, there are more sides to that story than you know"
The economy is a political issue, and the immigrant issue is intertwined with that issue,there's no separating them. whats' good for the Goose is(or should be) good for the gander.
and as far as I can tell, there's only 2 sides... legal/illegal, or right and wrong. that makes it only have 2 sides the way I see it.
"A fanatic is one who can't change his mind and won't change the subject."-Winston ChurchillThere are plenty of places to discuss immigration on the web.
I neither have the time or patience for this Butch. Gray is the way the world works, and it contains more shades than black and white. <!----><!----><!---->
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Thanks, but no worries. It was rather ironic (and sort of pitiful) in that, like most of what Ron has said here, it was completely misinformed.
Yours,
Samson Stern ;-)
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