[nolidad]

While many politicians are cheering that we are finally heading out of the worst recession since the great depression, maybe we should take a second look if this isn't really a double dip like the 30's but only worse.

This investment site gives a great synopsis of why we need to prepare for another crash in the economy.

U.S. Economic Outlook

Also there is this:

Report: Secret Plot Against Dollar

While the Saudis have vociferoously denied this happening, more and more there is talk of moving away from the USD as the global currency for goods. This would be catastrophic because if oil moved away from being purchased in USD- nations around the world would flood America with our currency to purchase the currencies to buy oil with.

And if that isn't bad enough, with unemployment continuing to rise tax receipts are drasticaaly down for S.S. and mesicare thus causing both to draw in their nonexistent trust funds years earelier than anticipated. Either they will have to raise taxes to cover these shortfalls, increase the size of the deficit, or just not report hte deficits because they are drawing form the "trust funds", even though the cash was spent long ago.

No matter how you look at it, its going to get a whole lot worse.

FDR had WW2 to get us out of the great depression. We already are in 2wars.
He started deficit spending as an economic tool. We have been doing it since. Our debt is unsustainable alrready

Foreign nations are more and more leery of buying our debt- if they stop we either have to make the p[ainful but necessary cuts to restore sanity to our economy or monetize our debt and imitate the Weimar Republic of the 30's.

[Epaphras]

The second article I don't give much credit to because it's full of "unnamed sources" and "secret meetings".

As long as I see Treasury bonds and securities being purchased, I will not be worried. That means investors still believe in the American economy.

If we have to "localize" our economies into metro- or regional economies due to our pieces of paper being worth less than they are now, is that so bad? People will set up regional exchanges and bartering systems and we'll be fine. Might even be a fresh start on a new economy for the future. The old one certainly has it's flaws, and I think (hope) most people are becoming fully disillusioned with the hyper-consuming, uber-materialistic American dream and will replace it with a more pastoral, holistic, sustainable, community- and family-values oriented economy.

[JerryLove]

I would point out that the first depression happened without deficit spending.

Then I would point out that your belief "they use dollars to buy oil" is wrong. The price of oil is based in dollars. That doesn't mean that you have to have actual greenbacks to buy it.

Thirdly, the rest of the world has a vested interest in doing the exact opposite of what you claim they are wanting to do. A US crash takes them with us.

[nolidad]

Originally Posted by Epaphras

The second article I don't give much credit to because it's full of "unnamed sources" and "secret meetings".

As long as I see Treasury bonds and securities being purchased, I will not be worried. That means investors still believe in the American economy.

If we have to "localize" our economies into metro- or regional economies due to our pieces of paper being worth less than they are now, is that so bad? People will set up regional exchanges and bartering systems and we'll be fine. Might even be a fresh start on a new economy for the future. The old one certainly has it's flaws, and I think (hope) most people are becoming fully disillusioned with the hyper-consuming, uber-materialistic American dream and will replace it with a more pastoral, holistic, sustainable, community- and family-values oriented economy.

Well te 2nd article links to other reports. And this concept has been touted around for a few years now.

Teh last major treasury auction was a bust. the US Treasury bought half the notes offered for auction.

Well to get to where you want to be for localized economies would involve enormous pain and disruption- going from a cash oriented to goods oriented economy in America would not be easy at all anymore. I agree about our nation being hyper materialistic, unfortunately the cure for that is a major depression until people could position themselves to a new economy.

[nolidad]

Then I would point out that your belief "they use dollars to buy oil" is wrong. The price of oil is based in dollars. That doesn't mean that you have to have actual greenbacks to buy it.

I should have been more specific-- revenues are paid in dollars and petroleum products are paid in with local currencies: I get a little too simplisitc for brevities sake.

The Impact Of Dollar Devaluation On The World Oil Industry: Do Exchange Rates Matter?

I would point out that the first depression happened without deficit spending.

Yes it hap[pened without deficit spending , but the deficit spending adopted by FDR prolonged the depression, as it is doing now.

Thirdly, the rest of the world has a vested interest in doing the exact opposite of what you claim they are wanting to do. A US crash takes them with us.

It would be painful but over the last 8-10 years the global economy has been attempting to insulate and isolate itself from America. They may or may not crash hard anymore. China has been ramping up internal consumption as well as building Asian markets. Europe can get along fine without us, about teh only nations that would crash hard are mexico and Canada.

But even removing the global implications and ramifications, our economy is heading for another major disruption. Just how fast it comes is ithe only unknown.

[nolidad]

Then I would point out that your belief "they use dollars to buy oil" is wrong. The price of oil is based in dollars. That doesn't mean that you have to have actual greenbacks to buy it.

I double checked, oil is bought in U.S. Dollars:

Crude Oil Price Forecast

Towards the end of the article it says this:

Currently oil is bought and sold on the world market in dollars, so everyone needs to first buy dollars in order to buy oil. We have reported on a trend for oil-producing countries to sell oil in Euros instead of Dollars. As more oil-producing nations fear the dollar is becoming "funny money" and demand payment in Euros, the world's need for Dollars will be greatly reduced. This is basic supply/demand economics.

Currently all three major oil markets (WTI, NYMEX, IPE) trade barrels of oil in US dollars. Consequently any country buying oil needs dollars to pay for it. This enables the US Federal Reserve to issue huge volumes of dollars to meet increasing demand for oil. In return oil producing nations invest dollar proceeds in US treasury bills, allowing for the current US budget deficit.

So crude is bought and sold in dollars and refined products in other currencies. So if the euro or the yen or the yuan or a basket of currencies is used to buy oil- then the world unloads there dollars and T- bills to the newer currency andnwe expereience hyper inflation while the rest of the world may not have to. Just as in Germany between the wars.

[nolidad]

A few other sad tidbits to let us know that things are going to get worse before they get better.

1. Banks "shadow inventory". Because of the massive influx of foreclosed houses on teh market banks are holding anywhere between 800,000-1,000,000 homes off the market till prices improve and they can sell them for at least what is owed on them.

2. Unemployment, While improving- the economy is still shedding more jobs than it is creating. The real unemployment rate currently stands at near 17% and will probably hit 20%.

3. Many folks will be seeing their 2nd ex tension of unemployment compensation checks run out between now and the 1st of the year. This is going to add to teh foreclosure rate as well as hurt more families.

4. With the nationalization of Freddie mac, sallie mae, and fannie mae , any appreciable influx of foreclosures or defaults on student loans will force the govt. to cover these losses, adding to the deficit or forcing increased taxes which will reduce job growth.

5. Currently 48 of 50 states are projected to be in deficit, for the fiscal year.

6. With the vastly reduced influx of tax revenue to the treasure- Social Security and Medicare will be drawing from their trust funds which have only Fed notes but no cash on them- increasing the deficit or increasing taxes.

7. The only glimmer fo light is that green energy is about the only sector that looks to be able to create jobs. But it is limited in that the ramp up time for many components of this still need alor of time to takeroot.

This economy has all the components to rival the depression- I hope not, but eventhe govt. options to help are limited by the staggering debt load politicans on both sides of the aisle have left us as a legacy.

[Hopeful]

Originally Posted by nolidad

5. Currently 48 of 50 states are projected to be in deficit, for the fiscal year.

This one I look at as the sleeping giant. I work in California and they are in such a bad way, I'm glad I'm not a resident. And, unlike the Federal Government, they cannot print money or sell U.S. Treasuries. But, even if they could who would buy them? There is no safety net for the states, especially for the very large ones like California.

[JerryLove]

Also, Noli seems to advocate a reduction in our foreign operations (like Afghanistan) which will put a lot of reservests and contractors (and suppliers) out of work.

[Epaphras]

Originally Posted by Hopeful

This one I look at as the sleeping giant. I work in California and they are in such a bad way, I'm glad I'm not a resident. And, unlike the Federal Government, they cannot print money or sell U.S. Treasuries. But, even if they could who would buy them? There is no safety net for the states, especially for the very large ones like California.

I'm in Michigan, and our deficit/shortfall is relatively large. We also have a structural deficit; the tax-structure is outdated for the kind of economy we have/are developing. It's based on the old manufacturing structure which is officially devastated.

[nolidad]

Originally Posted by Epaphras

I'm in Michigan, and our deficit/shortfall is relatively large. We also have a structural deficit; the tax-structure is outdated for the kind of economy we have/are developing. It's based on the old manufacturing structure which is officially devastated.

This one I look at as the sleeping giant. I work in California and they are in such a bad way, I'm glad I'm not a resident. And, unlike the Federal Government, they cannot print money or sell U.S. Treasuries. But, even if they could who would buy them? There is no safety net for the states, especially for the very large ones like California.

But even the Fed is reaching a critical point of no return. If they keep teh presses runnign as they have- they devaslue the dollar by flooding ht emarket with them. Selling treauries is a slippery slope. Interest on teh debt now consumes over $300 billion a year and nations are openly talking about their doubts about Americas ability to continue to absorb all this debt.

Personally I would love to see a year of Jubilee and then restructure the economy to discourage being a debt society.

[JerryLove]

Originally Posted by nolidad

But even the Fed is reaching a critical point of no return. If they keep teh presses runnign as they have- they devaslue the dollar by flooding ht emarket with them. Selling treauries is a slippery slope. Interest on teh debt now consumes over $300 billion a year and nations are openly talking about their doubts about Americas ability to continue to absorb all this debt.

Yea. Reagan and then GWB really put us in a bad spot. One which, it seems, requires getting worse before it gets better.

Personally I would love to see a year of Jubilee and then restructure the economy to discourage being a debt society.

Can't be done without abandoning capitalism.

[jthomas1600]

Originally Posted by Epaphras

I'm in Michigan, and our deficit/shortfall is relatively large. We also have a structural deficit; the tax-structure is outdated for the kind of economy we have/are developing. It's based on the old manufacturing structure which is officially devastated.

I hope when you talk about the kind of economy you now have/are developing it is not a service orientated industry....you know tourism, conventions, etc. where you're talking restaurant, hotel jobs and the likes. I lived in an community that went that route. Where I come from there were a ton of great paying jobs in the logging/lumber mill industry and in the commercial fishing/cannery industry. As outside forces reduced those jobs to nothing the community leaders (especially the mayor of the town that was the county seat and whose family owned Vandusen beverages) thought the best direction for the community was to promote tourism which they said would create new jobs. It did. But if you were a tree faller and lost your $50,000 a year job in the woods how well do you think you'd do flipping burgers for $7 an hour? I hope that's not where your economy is headed. A science and technology industry might be the way to go. So, after all that...what do you guys have going on up there?

[Epaphras]

Originally Posted by jthomas1600

I hope when you talk about the kind of economy you now have/are developing it is not a service orientated industry....you know tourism, conventions, etc. where you're talking restaurant, hotel jobs and the likes. I lived in an community that went that route. Where I come from there were a ton of great paying jobs in the logging/lumber mill industry and in the commercial fishing/cannery industry. As outside forces reduced those jobs to nothing the community leaders (especially the mayor of the town that was the county seat and whose family owned Vandusen beverages) thought the best direction for the community was to promote tourism which they said would create new jobs. It did. But if you were a tree faller and lost your $50,000 a year job in the woods how well do you think you'd do flipping burgers for $7 an hour? I hope that's not where your economy is headed. A science and technology industry might be the way to go. So, after all that...what do you guys have going on up there?

Well where I live (western Michigan) the emphasis is on health care. We have a "Medical Mile" with my alma mater's health professions/biomedical sciences building, Michigan State is building a medical school, there is a children's hospital, a giant regular hospital, a cancer treatment center, a cancer research center, all built within the last 10-15 years and all clustered there downtown. In the metro area there are three competing hospital systems, each with a specific niche.

We've seen some gentrification in the neighborhoods surrounding the Medical Mile as doctors and other medical professionals buy up and rehab the old houses and either live in them themselves or rent them out. It's becoming a problem in some areas because the poor who have lived there (mostly renters of absentee landlords) for two generations are being forced out -- as property values increase, so do rents. All of this is tempered by the housing market, but you may have seen on the Today show that Grand Rapids was ranked 2nd or 3rd in terms of affordability of housing. We've definitely hit the bottom of the housing bust -- September's house prices were way up from a year prior. A 2,000 square-foot 4-bedroom 2-bath house goes for only $129,000 or so.

There is also green technology popping up around here. Solar panel and wind energy start-ups are getting started here and the plan is for the community colleges and such to sponsor laid-off auto manufacturing workers to get retrained for high-tech manufacturing.

We are not as tied economically to Detroit or even the southeast side of the state as we used to be, thanks to the collapse of the auto industry. Politically we are tied to Detroit of course, but economically I think our leaders want our area to be an extension of the Milwaukee/Chicago/South Bend arc.

Up north and along the coast of Lake Michigan the emphasis is (and always has been) on tourism. The state has been putting out some really good ads over the last few years, check them out here. I hear you on the dangers of a tourism-based economy, but besides cottage industry there is nothing else available up there. If they don't make enough in the summer and early fall to last through the winter, they are screwed. Summer 2008 was bad for them because of gas prices. This summer (from what I hear) they actually fared pretty well because more people stayed local with their summer vacations.

[nolidad]

I hate when I hear the stories of the millions losing their jobs. It wrenches your gut to know fellow citizens are suffering because of the greed and corruption of both sides of the political aisle, big business and big unions and even folks themselves.

Well for more bad news- the dollar is fading as the currency of choice.

Dollar loses reserve status to yen & euro

This bodes horrendously for us all.

Also given that teh finance committee recommended out their version of the health bill (which isn't even written yet) and is the least expensive of all the bills and mandates masive medicare cuts and massive tax increases if you have a decent health plan- We are screwed for a long time to come.