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Recession?

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Do you see the U.S. in recession by the end of 2008?

Poll ended at Sat Oct 06, 2007 6:30 pm

Yes.
9
64%
No.
4
29%
Maybe.
1
7%
 
Total votes : 14

Re: Recession?

Postby Cornbread Maxwell » Wed Sep 26, 2007 5:23 pm

StlSluggers wrote:
Cornbread Maxwell wrote:The question asked is if we expect to see a recession next yr. I think the real question is how do we prepare for the coming DEPRESSION?

I think the difference between recession and depression is entirely in the hands of our government, and that's not very encouraging.


I dont think our government can do anything about it at all to be perfectly honest. The time for true reform to save this sinking ship has passed long ago. The Fed pouring $130 billion into the market this summer alone hoping that the dangerously leveraged population will continue to dig deeper into debt is a sad joke.

The average US worker is making LESS money than he was 5 yrs ago.
The average US worker is setting historical highs in debt - by a lot (have to go back to 1933 to get even close to the levels we are at now). Much of this debt is held in mortgages that will soon border usuary.
The government's answer is to make more money available for loans.

:-o
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Re: Recession?

Postby KPucks » Wed Sep 26, 2007 7:39 pm

Cornbread Maxwell wrote:
AcidRock23 wrote:I am inclined to agree that something bad will be happening. There is kind of a 'perfect storm' w/ cooked numbers all over the place (e.g. leaving fuel out of calculations of the rate of inflation...), the Chinese buying bonds w/ their spare cash and having long-term political goals involving Taiwan still lurking out there, aging boomers hitting retirement at the same time that the health care system is in need of revamping and prioritization that are challenging to manage with what has become a political 'hot potato'....


All good points. True inflation is MUCH higher than what is being reported. True unemployment is MUCH higher than what is being reported. Average income is declining for the first time in modern history at the same time that debt to income is at its highest point in history as well. All the while we have our leaders pushing us to borrow more! China and Japan now own nearly 50% of our Treasury bonds. Healthcare costs are through the roof at the same time that the first wave of the Baby Boom generation is hitting retirement age. There is a large segment of our population that are still tied to ARM and balloon loans on their houses, so there is a huge likelyhood that we will be seeing mass foreclosures within the next 5 yrs. I could go on, but the perfect storm analogy is a good one.

The question asked is if we expect to see a recession next yr. I think the real question is how do we prepare for the coming DEPRESSION?


Where are you getting the 50% number? I remember just last semester learning the up-to-date numbers on US treasury securities, and at the time only 30% of all US treasuries were held by foreigners, and Japan and China combined had about 10% total. I highly doubt that number has risen so rapidly in about 4-5months.
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Re: Recession?

Postby KPucks » Wed Sep 26, 2007 7:42 pm

Cornbread Maxwell wrote:
StlSluggers wrote:
Cornbread Maxwell wrote:The question asked is if we expect to see a recession next yr. I think the real question is how do we prepare for the coming DEPRESSION?

I think the difference between recession and depression is entirely in the hands of our government, and that's not very encouraging.


I dont think our government can do anything about it at all to be perfectly honest. The time for true reform to save this sinking ship has passed long ago. The Fed pouring $130 billion into the market this summer alone hoping that the dangerously leveraged population will continue to dig deeper into debt is a sad joke.

The average US worker is making LESS money than he was 5 yrs ago.
The average US worker is setting historical highs in debt - by a lot (have to go back to 1933 to get even close to the levels we are at now). Much of this debt is held in mortgages that will soon border usuary.
The government's answer is to make more money available for loans.

:-o


Again, where are you getting these statements. Real per capita GDP has been going up for many years now. Where does it say otherwise?
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Re: Recession?

Postby AcidRock23 » Wed Sep 26, 2007 8:54 pm

KPucks wrote:Again, where are you getting these statements. Real per capita GDP has been going up for many years now. Where does it say otherwise?


I am don't have data at hand (although Colossus
, by Niall Fergusson has quite a bit of detail about various realities of money, bonds and the politics of dealing with an aging population...) but I think that part of the problem is that 'per capita GDP' overlooks the fact that, thanks to 'management'/ looting by the *cough cough* group in favor of small government, low taxes and investing in cluster munitions with a low rate of return on our collective investment therein, our [meaning everyone in the USA...] wealth has become more concentrated towards the top of the food chain. I really think that people 'with' money would be well served to consider investing in schools and medical care as an investment in the market who buys whatever they might be selling but that does not seem to be the direction that the government has moved.

Rising CEO salaries are the tip of a large iceberg of people able to wallow in their McMansions, watching '0% down' plasma TVs and living a very high lifestyle due to management decisions by the government. I don't disagree with people being compensated for working a lot but you have to wonder where all of the people living in 5000 square foot houses going up all over the place get all the dough to pay for it. And, as the rate of foreclosures increases due to people w/ APR mortgages getting hosed by 'adjustments', the 'lower upper-middle class' who squeezed in are going to get spanked pretty hard.
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Re: Recession?

Postby Cornbread Maxwell » Wed Sep 26, 2007 10:44 pm

The income numbers were deduced using IRS information based on filings from 2000 - 2005. There was a NYT article on it this past August if you want to look that up.

Last May, US Treasury notes due in the next 10 yrs totaled $835.4 billion. International Investors held $672 billion of that - about 80%. The U.S. Department of the Treasury says non-Americans hold at least 52 percent of all notes and bonds. Currently foreign investors are reducing their holdings of notes in favor of longer term bonds. In the last 3 years, China ($420 billion) and the Nations of OPEC ($113 billion) have each doubled their holdings of Treasuries.

Since then, foreigners are selling bonds because of the continuing weakness of the $. If this trend continues, it will hurt the US economy badly.

Here is a great article about the current situation:
http://www.nakedcapitalism.com/2007/09/ ... ng-us.html
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Re: Recession?

Postby JTWood » Wed Sep 26, 2007 11:02 pm

Stupid question time: If everyone's selling US Treasury notes, who's buying them?

We're not cashing them in, are we?
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Re: Recession?

Postby JTWood » Wed Sep 26, 2007 11:38 pm

CheeseBeger wrote:
JTWood wrote:Stupid question time: If everyone's selling US Treasury notes, who's buying them?

We're not cashing them in, are we?


The US issues Treasury Notes/Bonds/Bills have a maturity date that varies depending on which type it is. Bonds/bills have coupon payments which are paid from the Government to the investor at pre-set intervals. The US government issues them and people/institutions/governments buy them, but because they are extremely liquid there is a large secondary market for them also.

They are considered risk-free because it is expected the U.S. won't default on the payments, so they are attractive to investors with low-risk tolerance.

Aye. Of all that, I was aware. I just wasn't sure if they carried a put option that I'd never heard of.

So back to my first question... Who's buying these notes? If there are better options out there, why would you buy an American note? Just for the reliability?
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Re: Recession?

Postby CheeseBeger » Wed Sep 26, 2007 11:39 pm

Haha as you were quoting me I deleted my post because I didn't read the post above yours and realized I wasn't answering your question
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Re: Recession?

Postby JTWood » Wed Sep 26, 2007 11:42 pm

Your ninja edit needs more practice. :-° :-D
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Re: Recession?

Postby AcidRock23 » Wed Sep 26, 2007 11:57 pm

JTWood wrote:So back to my first question... Who's buying these notes? If there are better options out there, why would you buy an American note? Just for the reliability?


The suggestion in Fergusson's book, very veiled but I got it out of it, is that China has extra savings, largely due to a lack of consumer goods (as they are all shipped here...) which they (as a culture...) are willing to invest in US money markets with a very long term, strategic view of things. The US, on the other hand, chooses very short term goals (e.g. "Saddam Hussein is bad so we need a war" [rather than a perhaps more effective executive action type of 'hit'? hmmmm...]) that do not have any sort of return.

With too much money, even if China 'loses' in the short term, should the dollar trend downward, they win as they accumulate leverage to push themselves into the top tier of nations, an ARod/ Pujols level of nationness, rather than say their current, frustrating Carlos Beltran-dom, full of unrealized potential.... :-?
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