The Economy

[rwh11385]

Hey now, wait a damn minute here....are you trying to say that America (and virtually all of the modernized world) that has been using up resources at such an amazing rate for so long that it has finally begun to bite us back?

Are you saying that now is the time to start paying the piper?

I just love this. For years and years, America was living high on the hog, while the native populations of the middle east were literally starving themselves to death while producing cheap oil for us to live on. We drive our huge cars, air condition our homes and workplaces while the rest of the world supports our "needs". We got rich and fat while they got pissed off.

So, in about 1972, the oil producing nations said "Hey fuckers, give us some mo money or we will cut off your oil!" so then we gave them more money...and 2% of them got rich, too. They gave us so much oil, in fact, that cars got WORSE average fuel economy than before...but we couldn't care less...gimme gimme gimme! I WANT MY SUV!

So now things are so bad, people are so pissed off at us, that the entire population seriously wants us (I mean ALL of us) to die.

I don't know about you, but I do not lay my head down at night (in my nice soft bed, in my nice comfy house, with my belly full, my internet, TV, DVD, whatever) dreaming of killing an entire country of people...so WHY are there so many people in this world who do? Could WE possibly be at fault somewhere here? Oh hell no, it is someone ELSE'S fault...fucking idiots, grow up.

I am gonna tell you this right now: Anyone having "issues" maintaining their "lifestyle" had better change their fucking "lifestyle", pronto.

Get over your expectation that you deserve a free ride...life is gonna get harder, everywhere. Try to stop being such a fucking pig.

/rant

Shit so it's not right just to blame BOOOOOOSH?!?? Damnnit Luke, that is not an easy a pill to swallow, as blaming other people!

[z31maniac]

I'M FROM THE MIDDLE EAST AND WE ARE BLAMING YOU ON OUR HIGH LIFE EXPENSES.THIS IS FOR YOUR INFO.

O'reary?

All the middle east OPEC countries have basically turned into welfare states because their gov'ts pull in so much money.

Fuck off.

[mrsleeve]

O'reary?

All the middle east OPEC countries have basically turned into welfare states because their gov'ts pull in so much money.

Fuck off.

Thank you you beat me too it.

[mrsleeve]

I'M FROM THE MIDDLE EAST AND WE ARE BLAMING YOU ON OUR HIGH LIFE EXPENSES.THIS IS FOR YOUR INFO.

Ok wait a fucking minute here, I got to thinking about your country,and remembered a few things and google confirmed them for me.

1: Yemen picked the wrong dog to back in the 90-91 gulf war, so you guys got slapped by some sanctions, your leaders wont go hungry or with out a lavish life style so the common dude has to. 2: A nice little civil war a few years latter prolly didnt help your your economy. 3: since 2005 Yemen has gotten billions in aid money from the worlds bank but has yet to make any reforms to its economy, thus has been cut off. 4: Yemen has oil and processes large amounts of oil and gas yet still has a 40% unemployment rate and remains one of the poorest countries in the world looks like the problem is your leaders are cashing in big and not spreading the wealth, then telling you that its all the evil americans fault.

So you try not once but twice to blow up a US war ship in harbor with a row boat full of TNT. Too bad the 1st one sunk because if it had worked both times you would be in the same situation that Iraq is in now.

Sounds to me like you need to be looking at your own government and you selves rather than blaming someone else.

End rant feel free to come back if you want more ass chewing

[DCColegrove]

(Wow, started something here didn't I.)

There is a book out called Free Lunch by Pulitzer Prize-winning jornalist
David Cay Johnston.

This should be required reading for all in this thread.

[CorvallisBMW]

(Wow, started something here didn't I.)

There is a book out called Free Lunch by Pulitzer Prize-winning jornalist
David Cay Johnston.

This should be required reading for all in this thread.

^ very good book, i recommend it too.

Also, "The World Is Flat" by Thomas L. Friedman is an excellent book dealing with global trade/economics in the new millennium.

[Money$hit]

I'm an econ major too. Good to see another one of us on here.

So: what do you think is causing the problem: falling dollar & dollar pegged to oil, government crowding out, housing crisis, or all of the above?

I think the crowding out of investment $ and the failing housing mkt put us where we are.

To start, the housing mkt crash really had/has two facets. Homebuilding has been an explosive business, and surpluses of homes drove down prices, as the market didnt have enough willing and able buyers. This was stage one. Stage two happened when consumers fell victim to rediculous contracts that mortgage companies and banks drew up. You could go out on a limb and say that it was a mkt failure and that consumers didnt have perfect information, but these contracts are black and white, and completely legal. Granted the banks were/are gouging, consumers should always read the fine print.

Finally, when these mortgages were signed deals, many were securitized, packaged together, and sold on the open market again to investors, investment banks, etc. Suddenly everyone had a hand in the market, as these securitized mortgages were generally seen as safe investments. The shit really hit the fan when the ARM's started going off, and consumers couldnt pay their mortgages.

In short, I think the housing mkt brought the finance sector to its knees, and the ripple effect has been felt throughout the entire market. I think crowding out has had an effect, but not near as large of an effect as the housing mkt. Also, note that while consumer expenditures account for approx. 70% of the GDP, about 35-40% of consumer expenditures is made up of housing costs. This makes housing a HUGE amount of our GDP.

[AdironRider]

Wow, Im fucking stoked to see some actual economics guys in here who actually know what the hell theyre talking about. I thought for sure it was going to be a bunch of 20 year olds blamin Bush. Money, you know your shit and nailed it right on the head.

[DCColegrove]

Just past the economics majors grasp lays something a bit more sinister.

[mrsleeve]

Just past the economics majors grasp lays something a bit more sinister.

This is quote worthy

[rwh11385]

Yeah, I just finished honors econ minor and shit, and money$shift is pretty $.

The most entertaining or sad part of the story is that so many people believe it was sustainable in the long run. A few years ago everyone was proud of how the US dollar remained strong against the world after our trade imbalance and lowering of interest rates.

Add into the mix the Euro gaining stability and being a preferred dollarization currency, and bam, we're hurting. Reliance on foreign oil for energy, reliance on India and China and helping them grow in appetite, and having too many stupids get bent over by adjustable rate mortgages, and what do you know? Some of us are hurting... and they're in part to blame...

[Money$hit]

The most entertaining or sad part of the story is that so many people believe it was sustainable in the long run.

QFT

Nothing we are doing is sustainable for a long period of time right now. Lowered rates and the stimulus plan are both short term answers. You could almost compare it to using a defibulator(sp) on the economy, try it a few times, but if it doesnt work, give it a rest, youre already dead.

To add, as Americans, we need to realize that the 1990's are over. As time moves on, we are moving from a Large open economy more toward a small open economy, in which our actions dont any longer influence the world interest rate. We arent there yet, but I think with the recent rate cuts, the Fed is realizing that their power is dwindling.
Just as the Japanese mkts had their hayday during the 80's, we had ours in the 1990s. Japan is no longer the economic super power they once had. America is going to slowly meld into this role as well. We will be price takers, not price setters. The only difference is that the Japanese have a much higher saving rate (around 5-10% is my guess), and our Marginal propensity to save is hovering around 1%.

In reference to the Solow model, our saving rate will be a huge downfall to our economy in the future, and it will certainly show in terms of reduced GDP.

[Money$hit]

Just past the economics majors grasp lays something a bit more sinister.

?

[nedtheviking]

Hey guys. I have to say, this has been one of the more interesting threads I have read here. I pretty much agree with what has been said, i.e. that the U.S. has pretty efficiently screwed itself over in multiple ways. I just wanted to add something and see what people thought. Let me first concede that i am a mechanical engineering major, not economics, so this isn't really something i know a ton about.

Last night i went to a talk by the author of Blackwater, Jeremy Scahill. His main point was that one reason the U.S. is hurting so badly is because we are privatizing everything, and its costing us a great deal of money. One major cost that he focused on was the 180,000 privately contracted soldiers and workers that are currently in Iraq, which he mentioned was more than the U.S.'s actual military forces. I can't remember the exact number he mentioned, but i believe it was 2 billion a week. It may be significantly higher.

He also mentioned that the highest payed soldiers who work for Blackwater get 650 dollars a day, but the U.S. government (and therefore us taxpayers) are charged 1200 dollars for these most elite soldiers. Paying private corporations enormous sums of money to do work for the government ensures that most of the money will go to the heads of those corporations, which means it will have difficulty getting back into the economy and will be locked up.

Again, I'm just curious what everyone thinks of these ideas, i dont have enough of a background in economics to be able to determine the legitimacy of this. But what do you guys think? is the trend of privatization a large problem? and if so, does anyone know anything that can be done about it?

Jeremy's talk was pretty upsetting, especially because it left me wondering what the U.S.'s future is.

peace.

[CorvallisBMW]

^True. Considering we spend more on defense than the entire rest of the world combined (over $1/2 Trillion per year, not including extra money for the wars in Iraq and Afghanistan which is another $200 billion/year), and it's all financed by gov't debt spending, no wonder we are in such a crisis. The first place we should look to streamline, cut waste and make more efficient is the defense budget. The days of the $200 toilet seat and $150 hammer are still with us, except now due to inflation and 'cost adjustments' it's more like $2000 and $1500, respectively.