Anyone who thinks this financial downturn is anything even close to the Great Depression is an utter moron. I know a few more people laid off right now than normal, but come on- most of us still have it fine. Many people aren't even feeling the effects because they don't have heavy stock investment. As well, many industries are not affected.

downstairs: Anyone who thinks this financial downturn is anything even close to the Great Depression is an utter moron. I know a few more people laid off right now than normal, but come on- most of us still have it fine. Many people aren't even feeling the effects because they don't have heavy stock investment. As well, many industries are not affected.

That could very easily be because the affects of the meltdown have not really been felt yet. If/when the credit companies collapse and no one can use a credit card without perfect credit and its impossible to get a basic loan for anything, then you'll see some serious problems. Maybe no Great Depression level, but probably the worst since then.

downstairs: Anyone who thinks this financial downturn is anything even close to the Great Depression is an utter moron. I know a few more people laid off right now than normal, but come on- most of us still have it fine. Many people aren't even feeling the effects because they don't have heavy stock investment. As well, many industries are not affected.

Not affected YET is the key term. We are by no means out of the woods yet, so it's also premature to say that none of us will be affected. And there is one group of people that's been severely impacted by all this stock market implosion - the Baby Boomers have seen a good portion of their retirement funds evaporate at a frightening rate. And this was at a time when most of them were getting very close to cashing out of the market. Now, if you were of a conspiratorial mindset you might find that an interesting coincidence indeed.....hedgefund managers living the good life suddenly having to come up with all those millions of $$$ to their investors and then the market imploding like that....

Of course, i'm sure there is no connection at all. This is all the result of some arcane and obscure housing bubble/credit market pop and implosion. The fact that it's cost a lot of people their retirement funds just as they were ready to retire is merely coincidence. However, it's a coincidence that is exceedingly ill timed. And legions of boomers are going to want that money back, or at the least they'll want SOMETHING. And they'll want it RIGHT NOW. Or else.

I'm not sure how the beltway insiders are going to handle all those pissed off baby boomers, but I suspect any 'solution' will involve raising taxes on my generation.

The thread will now commence with pointing out the inherent similarities and differences within any analogy.

downstairs: As well, many industries are not affected.

Which industries might those be? I'm trying to think of one that doesn't deal with money, but I must be having a failure of imagination.

The credit crunch is hurting consumer spending, and worse, it's halting the illusory growth that we built on credit. With spending curtailed like that, everyone is going to feel it.

To me it's obvious that 2008 != 1929. But I'm a mathematician.

Party Boy: The thread will now commence with pointing out the inherent similarities and differences within any analogy.

I keep reading conflicting stories and reports about the market. I honestly don't know who to believe anymore. One thing I do NOT like though is all this talk of bailing out all these businesses that are 'too big to fail'. If GM or Ford is inefficent and goes out of business then that's just too farking bad - let them fail. If union workers are suddenly out of work as a result, then give them some pitchforks and torches and tell them to go talk to the guys who ran that company into the ground. Heck, let the investors go along too, the excercise will do them some good. But government bailouts amount to nationalizing entire economic sectors. And that will not come to a good end. within a decade, we'll see just how bad that idea was....and it'll be too late to do much about it.

Weaver95: One thing I do NOT like though is all this talk of bailing out all these businesses that are 'too big to fail'.

I think that term has really been misused during this crisis. The issue isn't if a company is too big to fail, but if its too interconnected to fail. You can have a small company, but if it performs a necessary and vital function for a large sector of the economy, allowing it to fail would bring down everyone, which would destroy the economy.

I agree with you that this doesn't really apply to auto industries.

Weaver95: If GM or Ford is inefficent and goes out of business then that's just too farking bad - let them fail. If union workers are suddenly out of work as a result, then give them some pitchforks and torches and tell them to go talk to the guys who ran that company into the ground.

The question is pretty simple - how much pain are you willing to endure for the sake of ideology? I agree with you in principle we really should just let them fail, but are we really willing to let millions of people lose their jobs when we could help them out? There's no easy answer to that.

DamnYankees: The question is pretty simple - how much pain are you willing to endure for the sake of ideology? I agree with you in principle we really should just let them fail, but are we really willing to let millions of people lose their jobs when we could help them out? There's no easy answer to that.

Rorschach's Journal. October 12th, 1985. Dog Carcass in alley this morning, tire tread on burst stomach. This city is afraid of me. I have seen its true face. The streets are extended gutters and the gutters are full of blood and when the drains finally scab over, all the vermin will drown. The accumulated filth of all their sex and murder will foam up about their waists and all the whores and politicians will look up and shout 'Save us!' And I'll look down, and whisper 'no.' They had a choice, all of them. They could have followed in the footsteps of good men like my father, or President Truman. Decent men, who believed in a day's work for a day's pay. Instead they followed the droppings of lechers and communists and didn't realize that the trail led over a precipice until it was too late. Don't tell me they didn't have a choice. Now the whole world stands on the brink, staring down into bloody hell, all those liberals and intellectuals and smooth-talkers, and all of a sudden nobody can think of anything to say.

Weaver95: I keep reading conflicting stories and reports about the market. I honestly don't know who to believe anymore.

Its going to happen. "The market" as it were is really a collection of hypotheses trying to model the intersection of some things we can isolate and measure (a dollar, for example) with the profoundly confounding realm of human culture.

People get on here, pound their fists while espousing a metatheory that assumes prediction of future events based on some sort of meta theory that implies we have some sort of causal laws on how human cultural behavior always works. We don't.

Party Boy: People get on here, pound their fists while espousing a metatheory that assumes prediction of future events based on some sort of meta theory that implies we have some sort of causal laws on how human cultural behavior always works. We don't.

Hmm...self fulfilling prophecy much?

I'm less concerned with bad metaphor and more concerned with practical realities. the federal government is running around nationalizing everyhing they can get their hands on (all while pretending to be terribly burdened with the awesome responsiblity of course) and nobody can tell me why this is a good thing. In fact, some of the people who tell me that government bailouts are necessary are the very same people who, 10 years ago, were telling me that any government regulation of any sort was a sin equal to that of cain slaying abel.

On top off all this, the Republican party picked this decade to abandon entirely the concept of fiscal conservatism and pray to Jesus. well, that's all well and good but last I heard Jesus didn't give a damn about what happened to my 401k plan or my property taxes.

DamnYankees: Weaver95: One thing I do NOT like though is all this talk of bailing out all these businesses that are 'too big to fail'.

I think that term has really been misused during this crisis. The issue isn't if a company is too big to fail, but if its too interconnected to fail. You can have a small company, but if it performs a necessary and vital function for a large sector of the economy, allowing it to fail would bring down everyone, which would destroy the economy.

I agree with you that this doesn't really apply to auto industries.


Ford and GM have their tentacles everywhere. If they collapse and no one immediately picks up the slack you are looking at dealers, part suppliers, employees, etc... all losing their jobs.

But once they've lost their jobs, then things will get worse unless they get rehired somewhere else. But since the outlook is grim, people will not simply be rehired elsewhere.

That's a simplification, but the downward spiral that a depression/recession coupled with deflation can cause is dangerous.

Weaver95: Hmm...self fulfilling prophecy much?

Plus confirmation bias. Thats a big one to throw in the stew.

sloppy shoes: Ford and GM have their tentacles everywhere. If they collapse and no one immediately picks up the slack you are looking at dealers, part suppliers, employees, etc... all losing their jobs.

Toyota and Honda seem ready and willing.

DamnYankees: downstairs: Anyone who thinks this financial downturn is anything even close to the Great Depression is an utter moron. I know a few more people laid off right now than normal, but come on- most of us still have it fine. Many people aren't even feeling the effects because they don't have heavy stock investment. As well, many industries are not affected.

That could very easily be because the affects of the meltdown have not really been felt yet. If/when the credit companies collapse and no one can use a credit card without perfect credit and its impossible to get a basic loan for anything, then you'll see some serious problems. Maybe no Great Depression level, but probably the worst since then.

Let me preface this by admitting I am in no way an economist.

I would venture to say that we're in uncharted territory as far as this economic crisis is concerned. We might be seeing similar situations as what happened in 1929 (banks failing, stocks going haywire, unemployment rising and so on), but the entire structure of our economy is very different than it was eighty years ago. Most of the economy now is based upon the service industry and consumer goods whereas back then it was mostly agriculture and some manufacturing, I believe.

And like you said about the interconnectedness of certain industries, I think the same sort of thing would apply to service based companies and businesses. With more and more people holding back on their spending in order to put that money towards necessities and paying off debt, there is less and less being pumped into these businesses which perpetuates a drastic downturn in the economy.

I hope that made sense.

sloppy shoes: That's a simplification, but the downward spiral that a depression/recession coupled with deflation can cause is dangerous.

But a bailout doesn't stop that from happening. At best, we delay the inevitable collapse by a couple years. At worst, we make that eventual collapse much larger.

At no point in this process has anyone really addressed the core problems and flaws in the marketplace that led us to this situation. And I don't think anyone will do that, because they would have to admit that we had flaws in the first place. Corporate america admitting that they made mistakes? unpossible!

Ok, egos aside nobody siting in a board room is going to want to see effective and efficient regulatory authority riding herd on how they do biz. THAT is what has to happen....but given the grip and influence those self same directors have on the Fed, they aren't going to allow something like that to happen to them.

DamnYankees: sloppy shoes: Ford and GM have their tentacles everywhere. If they collapse and no one immediately picks up the slack you are looking at dealers, part suppliers, employees, etc... all losing their jobs.

Toyota and Honda seem ready and willing.

I don't know if they would be allowed or capable of purchasing the plants, infrastructure, etc...

GM and Chrysler have wanted to merge but they can't find the investors willing to give them a loan to do it.

It's hard to say what this government will do if they enter Chapter 11. They may force some type of restructuring, they may try to auction them off, they may force some type of merger, etc...

sloppy shoes: It's hard to say what this government will do if they enter Chapter 11. They may force some type of restructuring, they may try to auction them off, they may force some type of merger, etc...

I'm wondering what the effects would be if the big three did have to declare bankruptcy and Honda and Toyota bought the remains.

DamnYankees: sloppy shoes: Ford and GM have their tentacles everywhere. If they collapse and no one immediately picks up the slack you are looking at dealers, part suppliers, employees, etc... all losing their jobs.

Toyota and Honda seem ready and willing.

and having a smaller auto maker rise up to fill the market wouldn't be a bad idea either.

My problem with this bailout is that it smacks of trying way too hard to hold on to something thats way past its time. Let it go. Its time is done.

Aarontology: sloppy shoes: It's hard to say what this government will do if they enter Chapter 11. They may force some type of restructuring, they may try to auction them off, they may force some type of merger, etc...

I'm wondering what the effects would be if the big three did have to declare bankruptcy and Honda and Toyota bought the remains.

I think the CEO, CFO and board of directors for the big three would take their golden parachutes and retire to a tropical island paradise with their close friends and families.

Life for the rest of us would pretty much suck tho.

Aarontology: I'm wondering what the effects would be if the big three did have to declare bankruptcy and Honda and Toyota bought the remains.

Better and cheaper cars?

Weaver95:
But a bailout doesn't stop that from happening. At best, we delay the inevitable collapse by a couple years. At worst, we make that eventual collapse much larger.

At no point in this process has anyone really addressed the core problems and flaws in the marketplace that led us to this situation. And I don't think anyone will do that, because they would have to admit that we had flaws in the first place. Corporate america admitting that they made mistakes? unpossible!

Ok. What are the core problems?

What should America "make"?

SilentStrider: My problem with this bailout is that it smacks of trying way too hard to hold on to something thats way past its time. Let it go. Its time is done.

Oh, it's not just the auto industry that's suffering from that attitude. you can see similar viewpoints from the music/entertainment industry and IT giants like Microsoft. Change is bad for them, since the market as it stands works to quash competition and keep prices artifically high. So they work to freeze the market to their advantage.

which isn't working of course, but they'll keep trying as long as they can while hoping to restructure a new market plan that keeps them on top.

sloppy shoes: What should America "make"?

and that, my friends, is the 750 billion dollar question.

Weaver95: I think the CEO, CFO and board of directors for the big three would take their golden parachutes and retire to a tropical island paradise with their close friends and families.

Ideally we would see them put into stockades on the steps of Congress, along with the top brass of the financial industry. Also, there would be bushels of mushy old tomatoes to throw.

Tr0mBoNe: Better and cheaper cars?

I would hope so. Honda and Toyota have a business model that works pretty well, so maybe they could apply it with what remains of the big three. They may not be based in America, but it might ensure that the auto industry here lives quite a while because of their policy of manufacturing vehicles in the markets they are sold.

So because the Big Three have failed to compete effective with Japan, Korea and Germany for the past thirty five years, we now are supposed to bail them out.

The same Japan, Germany and Korea who now manufacture more cars on American soil than the so called big three American (do they? I would not be surprised, seems like GM opens plants more often in Russia than in the USA)

Japan, Germany and Korea have shown you can build superior products using American workers, why can't Detroit do the same?

If Detroit goes under, Americans will still buy cars built in America. They will have names on them like Nissan, Toyota and Honda.

I fail to see the reason we prop up Detroit yet again so they can destroy electric cars the public wants (EV-1, 2000, California) and lobby against improvements in pollution standards for years, so this unholy marriage of Big Union and Big Three can perpetuate.

America is better off letting the sorry ass final act of the Big Auto Union and Big Three Auto die the death is should have died 30 yrs ago, and would have, if lobbyists hadn't kept them around back then.

sloppy shoes: What should America "make"?

Love not war, man.

The unemployment stats quoted don't take into account that there are lots of part-time crap jobs available today for people to take instead of simply being unable to find work. Those that cannot can take advantage of a myriad of government programs to help them not starve on the street.

The FDIC is softening the blow for people in manners both real and theoretical. We won't see runs on banks.

Is business in as deep as they were in the early 30's? Aside from the previous factors, maybe. The US industrial scene is not what it was. That's why Smoot-Hawley was such a disaster. At the time US industry was exporting goods to get money in; raising tariffs discourage imports (and exports by reciprocity). Tech has supplanted it somewhat, but with a global recession, tech alone isn't going to get the US out of its problems.

What hasn't changed is the banking business. Loans are still made, and when loans go bad and collateral depreciates, banks are still left holding their proverbial penises in their hands.

What also hasn't changes is that people who have no money can't buy anything. $50k/yr average salary doesn't buy a whole lot for a family of four. It can pay a mortgage on a $150,000 house. Once they pay all the other bills they're left with a few hundred dollars a week, and that's before saving for retirement and college. There's not a lot of money for buying a new car off of Detroit. There's not a lot of money to fly to Disney. You get the idea.

Why aren't people making more money? Why are the basic necessities of life so much more expensive (or why is our money worth so much markedly less than it used to be)? These are the questions that need to be answered rather than "Why is the market in the tank?"

Tr0mBoNe: Better and cheaper cars?

Information for the thread:
Top Ten best selling cars England

1. Ford Focus 126,928
2. Vauxhall(GM) Astra 113,894
3. Ford Fiesta 102,872
4. Vauxhall(GM) Corsa 94,120
5. Volkswagen Golf 68,843
6. Peugeot 207 67,185
7. BMW 3 Series 58,544
8. Renault Mégane 55,468
9. Renault Clio 53,907
10. Vauxhall(GM) Vectra 50,983

Party Boy: England
Britain

Goimir: $50k/yr average salary doesn't buy a whole lot for a family of four.

supplemental info

It wont be, there are certain mechanisms in place to prevent it.

There wont be people eating rocks. They have government money to buy McDonalds. Which means McDonalds can hire more hapless teenagers at minimum wage and pay out their profits in dividends. And the people that would be eating rocks are still eating McDonalds bought with government money.

They will live in government funded housing, with section 8 paying off the landlord's mortgage on the property.

But at least they wont be living in Hoovervilles.

The auto companies are all set to take more government money, and the politicians are willing to give it to them because the UAW is such a pivotal force in the Democrat party.

But at least the Unions won't be marching on Washington.

Our kids are going to pay for all this, mind you. Which is ok, because I expect my kids to make like 50 billion dollars if I ever have them.

For anybody that cares,

here is a good explanation of a service economy.

Link (new window)

Here is an outline: Link (new window)

Also, the first site provides a lot of information, and both are run by the government.

sloppy shoes: Ok. What are the core problems?

What should America "make"?

It's not so much 'what' as 'how'. Look at the way we make things - everything from local zoning laws up to and including federal regulation, everyone (and I do mean everyone) has their fingers in the pie. Union reps, tax officials, regulatory agencies A to Z, polticans trying to get re-elected (or stay elected). If you want to build a new plant, you have to find a way to satisfy all those people and organizations. And even if you find a way to do that, someone will always protest your plans to build or expand. So there's one bundle of issues right there.

We're also falling way behind in terms of development. I could go on for days about how intellectual property laws (as currently stand) hinder development and innovation rather than protect, but it's a somewhat obscure and arcane rant. Suffice it to say we need to rethink a lot of that aspect of the law, since it's nowhere near ready for life in the 21st century.

And then there's how we actually run businesses. Everything from transparency at all levels down to worker training and advancement. we have failed at every turn to make businesses more efficient, to keep investors properly informed as to how a corporation functions and to maintain a viable workforce able to meet the challenges of this day and age. the solution to our problem was to outsource, obfuscate and get government bailouts rather than confronting the reality of a system that's broken.

Weaver95: sloppy shoes: Ok. What are the core problems?

What should America "make"?

It's not so much 'what' as 'how'. Look at the way we make things - everything from local zoning laws up to and including federal regulation, everyone (and I do mean everyone) has their fingers in the pie. Union reps, tax officials, regulatory agencies A to Z, polticans trying to get re-elected (or stay elected). If you want to build a new plant, you have to find a way to satisfy all those people and organizations. And even if you find a way to do that, someone will always protest your plans to build or expand. So there's one bundle of issues right there.

We're also falling way behind in terms of development. I could go on for days about how intellectual property laws (as currently stand) hinder development and innovation rather than protect, but it's a somewhat obscure and arcane rant. Suffice it to say we need to rethink a lot of that aspect of the law, since it's nowhere near ready for life in the 21st century.

And then there's how we actually run businesses. Everything from transparency at all levels down to worker training and advancement. we have failed at every turn to make businesses more efficient, to keep investors properly informed as to how a corporation functions and to maintain a viable workforce able to meet the challenges of this day and age. the solution to our problem was to outsource, obfuscate and get government bailouts rather than confronting the reality of a system that's broken.

They can't concede that the system is broken. It would mean the Soviet Union won, much to the chagrin of Zombie Reagan.

Party Boy: Goimir: $50k/yr average salary doesn't buy a whole lot for a family of four.

supplemental info

But in most of the country, it is enough to live on. I say that as one son in a family of four that was for most of my childhood solely supported by an untenured journalism professor's 35k annual salary.

No food stamps or any of that crap either.

Buck up, live cheap, farkers.

incendi:
But in most of the country, it is enough to live on. I say that as one son in a family of four that was for most of my childhood solely supported by an untenured journalism professor's 35k annual salary.

No food stamps or any of that crap either.

Buck up, live cheap, farkers.

35k when? Adjust that for today's dollars here. (new window)

You *can* live on the cheap. But living on the cheap doesn't buy new cars and other new goods that are made in the US, which was more my point. A thriving middle class spending money is what drives these industries, not people buying used stuff at flea markets.

/not that there's anything wrong with doing that, and I live as cheaply as I can, to the point of making everything I can from scratch, fixing my own appliances as pointed out in that TFD thread earlier today, etc.

slobarnuts: They can't concede that the system is broken. It would mean the Soviet Union won, much to the chagrin of Zombie Reagan.

It's a no brainer why so much of our manufacturing wandered overseas - there simply wasn't any incentive for corporations to keep it inside the US anymore. They still get tax breaks galore (here in the US), they can just bribe local officials to shut up and go away (cheaply too) and the workforce there can't form unions and are generally grateful for the opportunity to be abused for pennies on the dollar.

Now, i'm not saying we need to strip away our regulatory laws. They're there for a good reason. However, the way they're enforced isn't very helpful. And there isn't much in the way of consistancy. navigating the tangled web of laws and agencies is costly and time consuming and not always successful. And some of the laws don't even make sense anymore.

Weaver95: Now, i'm not saying we need to strip away our regulatory laws. They're there for a good reason. However, the way they're enforced isn't very helpful. And there isn't much in the way of consistancy. navigating the tangled web of laws and agencies is costly and time consuming and not always successful. And some of the laws don't even make sense anymore.

Solution is simple. Hoist a tariff on externally produce goods manufactured for U.S. based companies.

It wont happen because of lobby money.

But that would fix the problem.

Goimir:
35k when? Adjust that for today's dollars here. (new window)

You *can* live on the cheap. But living on the cheap doesn't buy new cars and other new goods that are made in the US, which was more my point. A thriving middle class spending money is what drives these industries, not people buying used stuff at flea markets.

/not that there's anything wrong with doing that, and I live as cheaply as I can, to the point of making everything I can from scratch, fixing my own appliances as pointed out in that TFD thread earlier today, etc.

I'm 21 now. My stepfather has moved up to a job that pays a whopping 45k and I've got two additional younger siblings. Me and my older brother are out entirely on our own. So essentially, he's supporting a family of four on 45k in a major metropolitan area, and they're doing fine.

incendi: Buck up, live cheap, farkers.

The article contains relevant information on the differences of the average family from the early 70's to today - highlighting the drop in expendable income despite the advent of a two income family. Theres also additional information related to the assumption of "over-consumption" and the new perils associated with two income earners.

I understand your anecdote is on your personal experience. So far, the average American is also adjusting with less expendable income, and more productivity (not wages). In fact, Americans lead the world in labor productivity.

Weaver95: DamnYankees: The question is pretty simple - how much pain are you willing to endure for the sake of ideology? I agree with you in principle we really should just let them fail, but are we really willing to let millions of people lose their jobs when we could help them out? There's no easy answer to that.

Rorschach's Journal. October 12th, 1985. Dog Carcass in alley this morning, tire tread on burst stomach. This city is afraid of me. I have seen its true face. The streets are extended gutters and the gutters are full of blood and when the drains finally scab over, all the vermin will drown. The accumulated filth of all their sex and murder will foam up about their waists and all the whores and politicians will look up and shout 'Save us!' And I'll look down, and whisper 'no.' They had a choice, all of them. They could have followed in the footsteps of good men like my father, or President Truman. Decent men, who believed in a day's work for a day's pay. Instead they followed the droppings of lechers and communists and didn't realize that the trail led over a precipice until it was too late. Don't tell me they didn't have a choice. Now the whole world stands on the brink, staring down into bloody hell, all those liberals and intellectuals and smooth-talkers, and all of a sudden nobody can think of anything to say.

Rorschach's journal???

Whiskey
Tango
Foxtrot

incendi: Goimir:
35k when? Adjust that for today's dollars here. (new window)
45k

Heh, 35k in 1998 is 44k now - given the increased cost of living in a city vice the rural south (Statesboro, GA) he's probably actually living on less purchasing power now.

It's amazing what subsisting on cheap wholesome food and not being a whore to pop culture and fashion can do for your budget.

Prior to the election McCain was roasted for saying the fundamentals of the economy were strong and we'll do just fine in the long run. He was skewered. Now that Obama has won everyone is saying such.

Cos they say two thousand zero eight party over
Oops, outta time.
So tonight we're gonna party like it's 1929.

A well written and thoughtful article, which means this is a total surprise that it was greenlit.

incendi: incendi: Goimir:
35k when? Adjust that for today's dollars here. (new window)
45k

Heh, 35k in 1998 is 44k now - given the increased cost of living in a city vice the rural south (Statesboro, GA) he's probably actually living on less purchasing power now.

It's amazing what subsisting on cheap wholesome food and not being a whore to pop culture and fashion can do for your budget.

And like you said, you're not living there now. I understand that one CAN live on the cheap, and I do it. I live on 35k/yr. I buy clothes on sale. I buy butter and meat on sale and put it in the freezer. I bake my own bread, brew my own hard cider and wine. We cloth diaper our daughter, and wash the diapers with washing soda and borax in a washing machine that I bought for $50. Everything gets hung up to dry. I do my own metalwork repairs.

Don't tell me about being cheap.

Goimir: And like you said, you're not living there now. I understand that one CAN live on the cheap, and I do it. I live on 35k/yr. I buy clothes on sale. I buy butter and meat on sale and put it in the freezer. I bake my own bread, brew my own hard cider and wine. We cloth diaper our daughter, and wash the diapers with washing soda and borax in a washing machine that I bought for $50. Everything gets hung up to dry. I do my own metalwork repairs.

I thought I was hard core.
You win.