US Economy: Going to hell, or to heck?

Only a wino or a Republican would think this economy is strong.

What about a Rino?

Kunstler writes: "Things may get so chaotic that Mr. Bush and his circle may actually be removed from the scene before his term in office expires."

If only. Hyperbole is Kunstler's greatest strength and his greatest weakness, too. It's the source of his fame and the reason so few take him seriously.

I don't think there's a snowball's chance in Plano that Bush will be impeached, but this country and the rest of the world needs it. Badly. Impeachment would be a much-needed sign to others who aspire to govern that shredding the constitution will no longer be tolerated. And it would show the rest of the world that we're not really as stupid and venal as we appear.

Samuelson's point is that, even with some serious jolts, the US economy is no where near 1981-82 numbers, let alone the Great Depression. I think this is a good point to make, because it helps put things in perspective.

Dismiss all the hysteria and uninformed speculation, and keep your eye on the ball. The ball is corporate earnings. Check any business website and you will see that earnings of good companies continue to increase. If we were in a meltdown, earnings would be falling or negative.

'The ball is corporate earnings. Check any business website and you will see that earnings of good companies continue to increase. If we were in a meltdown, earnings would be falling or negative.

And ain't that what it's all about. Kind of like America in the Roarin' 20s. My question to Jack is: How much longer can US continue to live like there's no tomorrow, with little regard to sacrifice and simple living?

AMH: "[T]he US economy is no where near 1981-82 numbers, let alone the Great Depression."

Give it time, dude. They're are a lot of fingers in the dike right now, but the dike continues to crumble.

Stevereno:

I agree with your assessment of the situation, but not with your solution.

The Fed should keep short term rates low to soften the blow. There is no pent-up demand for credit. Most individuals, corporations and governments (local, state) are at the point where they cannot borrow any more money, especially in this risky environment. Housing is already a goner. Mortgage rates are already beginning to detach from LIBOR, etc., as lenders demand a "risk premium".

What has to happen is foreign central banks pegging their currencies to the dollar have to stop inflating their local currency to maintain that peg. This is the cause of runaway commodity prices at a time of falling demand. The Fed is not inflating! Demand for credit is declining in the US and the Fed has actually been draining money from the system (if anybody would bother to look)! Wealthy Chinese, Indians, Russians, Middle Easterners, etc., on the other hand, have been experiencing out-of-control inflation and are purchasing commodities as an inflation hedge.

In times of wage deflation and declining standards of living worldwide, what all of us need is price deflation. It's coming. It's only a matter of time. (And it will extend to education and medicine, too, but that's another story.)

jack
Dismiss all the hysteria and uninformed speculation, and keep your eye on the ball. The ball is corporate earnings. Check any business website and you will see that earnings of good companies continue to increase. If we were in a meltdown, earnings would be falling or negative.

You mean like the collapse of Home Depot and the construction companies?

But, anyway, by the time non-stupid random corporations collapse, the problem will have already worked its way through the general population. Basically, we'd have hit the point where either people cannot spent money (because they have no money.), or they cannot work (Because they are homeless, or because they can't afford the commute.). Corporations crashing is the last point of an economic meltdown, at least one like this.

Your statement is akin to saying 'If we were in a nuclear meltdown, the walls would be on fire'. Erm, yeah, eventually.

And, more to the point corporate earning are falling.

AMH: "[T]he US economy is no where near 1981-82 numbers, let alone the Great Depression."

We start out with much more debt now compared with 1981. Much more of the economy is hidden away in derivatives and hedge funds. Small changes are magnified. Our entitlement programs are accelerating with boomers retiring soon. Core inflation assumes that changes in energy prices are widely variable and temporary. A look around at the rest of the world might make you think energy costs (and food) are up for the long term.

Steve

It seems like the economy is not as bad as the liberals put it and not as good as the conservatives put it. Plus there are real effects out there and its not a mental recession.

It seems to be the normal cycle of things every 30-40 years a major technology is hit when everyone has it then there is a depression or panic because sales go way down. Mostly due to speculation.

Industrialization, Railroad, Automobile/Internal Combustion, Transistor, Internet/Computer, and now we are at the decline waiting for the next big thing.

For at least 15 years, the U.S. economy has run on easy credit and, if not cheap, at least affordable oil. Now, over-and-out on both. I don't see how anyone can make a credible case that we're not in for a painful and lengthy adjustment.

Are there growth opportunities? Sure: alternative energy development, mass-transit equipment and infrastructure, environmental cleanup equipment, redevelopment of urban and near-suburban real estate, online retail, generic and discount pharmaceuticals, even financial services that aren't too far gone to clean up their act. Do they offer short- or even medium-term profits? Highly doubtful.

Meanwhile, home values are a year or two away from bottoming out, the blue- and white-collar workforce continues to contract (during which wages will stagnate or decline), inflation in fuel, utility and food costs is nowhere near stabilization (let alone reversal), and consumers - at least those with two brain cells to rub together - are battening down the hatches for the long haul.

jack
Dismiss all the hysteria and uninformed speculation, and keep your eye on the ball. The ball is corporate earnings. Check any business website and you will see that earnings of good companies continue to increase. If we were in a meltdown, earnings would be falling or negative.

You mean like the collapse of Home Depot and the construction companies?

But, anyway, by the time non-stupid random corporations collapse, the problem will have already worked its way through the general population. Basically, we'd have hit the point where either people cannot spent money (because they have no money.), or they cannot work (Because they are homeless, or because they can't afford the commute.). Corporations crashing is the last point of an economic meltdown, at least one like this.

Your statement is akin to saying 'If we were in a nuclear meltdown, the walls would be on fire'. Erm, yeah, eventually.

And, more to the point corporate earning are falling.