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post #1 of 14 (permalink) Old 03-04-2009, 06:56 AM Thread Starter
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Economy Explanation

Will an Economic Guru step up and explain in a nutshell how, why, and who's to blame for this economic hole we're in.

And, any predictions of light at the end of the tunnel?
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post #2 of 14 (permalink) Old 03-04-2009, 07:42 AM
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I am no expert but I will try to sum it up for the "average joe's"

There is not one person responsible. It has been a trickle effect that was started in the 90s with a housing boom. It was also started in the 70s when we were taken off the gold standard and set the dollar on an imaginary roller coaster of value. When a country thrives on credit, eventually it will tank no matter what type of economic system it is on. The housing market collapse started the "current" downturn because people bought houses to expensive for them to own. That lost people equity which hurt the credit systems; which hurt the car manufactures; which hurt the stock market numbers; which hurt everyday buisness owners which started the layoffs.

With every action there is an equal and opposite reaction, basically right now were getting the reaction to the boom....a bust.

With talk of nationalizing the banking industry, the big 3, and every other major company in the US that hurts the confidence of the consumer, which hurts the confidence of the stock holders, which hurts the confidence of the markets itself.

If anyone has a better explanation let me know...I probably missed out a few steps along the way, and we all know more steps are to be added.

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post #3 of 14 (permalink) Old 03-04-2009, 08:42 AM
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Originally Posted by MadMax404m View Post
I am no expert but I will try to sum it up for the "average joe's"

There is not one person responsible. It has been a trickle effect that was started in the 90s with a housing boom. It was also started in the 70s when we were taken off the gold standard and set the dollar on an imaginary roller coaster of value. When a country thrives on credit, eventually it will tank no matter what type of economic system it is on. The housing market collapse started the "current" downturn because people bought houses to expensive for them to own. That lost people equity which hurt the credit systems; which hurt the car manufactures; which hurt the stock market numbers; which hurt everyday buisness owners which started the layoffs.

With every action there is an equal and opposite reaction, basically right now were getting the reaction to the boom....a bust.

With talk of nationalizing the banking industry, the big 3, and every other major company in the US that hurts the confidence of the consumer, which hurts the confidence of the stock holders, which hurts the confidence of the markets itself.

If anyone has a better explanation let me know...I probably missed out a few steps along the way, and we all know more steps are to be added.
Thats not a bad analysis.

I also think that the run up in energy prices tipped over the apple cart. People were living on the financial edge but could make their house payments until they started spending $100 a week on a tank of gas. Along with the jump in gas prices came a jump in electric prices, and natural gas prices, and groceries.

At this point there was no disposable income left (or people were actually in the negative, living off of savings), and people were already leveraged to the max on credit, and probably also had a HELOC, so borrowing more money was out of the question.

Something had to give, and it started with the subprime homeowners who were closest to the edge. Then, like an old blanket with a loose thread the economy began to unravel.
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post #4 of 14 (permalink) Old 03-04-2009, 09:10 AM
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Dubya, of course.
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post #5 of 14 (permalink) Old 03-04-2009, 09:17 AM
 
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Dubya, of course.
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<------------ Actually thinks post #2 is pretty good even if overly broad.
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post #6 of 14 (permalink) Old 03-04-2009, 09:27 AM
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post #7 of 14 (permalink) Old 03-04-2009, 09:29 AM
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Originally Posted by 1fastdem View Post
<------------ Actually thinks post #2 is pretty good even if overly broad.
I tried to keep it as simple as possible, with the economic guru's on here the main points tend to get lost in all the mumbo-jumbo of everyone trying to out smart the other poster and it turns into a pissing contest. I tried to get the broad points at the top of the topic before it spins out of control again

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post #8 of 14 (permalink) Old 03-04-2009, 09:48 AM
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Originally Posted by mikeb View Post
I also think that the run up in energy prices tipped over the apple cart. People were living on the financial edge but could make their house payments until they started spending $100 a week on a tank of gas. Along with the jump in gas prices came a jump in electric prices, and natural gas prices, and groceries.

At this point there was no disposable income left (or people were actually in the negative, living off of savings), and people were already leveraged to the max on credit, and probably also had a HELOC, so borrowing more money was out of the question.

Something had to give, and it started with the subprime homeowners who were closest to the edge. Then, like an old blanket with a loose thread the economy began to unravel.
That is what I've been saying for a while now. The oil run up triggered the collapse, yet NO ONE is blaming those guys and holding them responsible. It affected not only gas, but electricity and groceries as stated. Additionally, it forced businesses large and small to raise prices along with making cutbacks to maintain profitability due to higher mfg costs and higher sales/shipping costs.

We would've still had a problem eventually, but high oil prices didn't push us over t he edge, it launched us from a catapault.

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post #9 of 14 (permalink) Old 03-04-2009, 05:04 PM
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post #10 of 14 (permalink) Old 03-04-2009, 05:09 PM
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The American people. It's as simple as that.

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post #11 of 14 (permalink) Old 03-04-2009, 06:18 PM
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Originally Posted by FSON View Post
Will an Economic Guru step up and explain in a nutshell how, why, and who's to blame for this economic hole we're in.

And, any predictions of light at the end of the tunnel?
Well besides all of the opinions and finger pointing that plague this specific forum in regards to who did what...
The last two geniuses that have been in office- Clinton & Bush, both pushed for sub prime loans for people who were on a shoe string budget such as minorities.
It worked out GREAT for a lot of people in the housing industry as well. Construction was booming, etc.
Everything was fine and dandy until the gas prices soared out of control.
The main problem was those people who cannot really afford housing did not figure $4.00 plus per gallon of gas in their SUV's . Especially since they have car "notes". They could barely scrape by when it was $1.50 a gallon. Well when those people started financing gas with their credit cards, then they over extended themselves even more on credit.

This is just the tip of the ice berg as to what is going to happen, it will get MUCH worse.
I do not believe this would be as bad as it is, if the last guy in office acted like he gave a fuck or if he was smart enough to have a decent economic team in place to help protect the people that elected his sorry ass to begin with.
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post #12 of 14 (permalink) Old 03-04-2009, 07:25 PM
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its the dominoe effect,started by dirtbag gready politicians and bankers.

the middle class will be whiped out within 2 years.bet

RON PAUL '08
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post #13 of 14 (permalink) Old 03-05-2009, 08:16 AM
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Its the 40K millionaires fault! They are everywhere just look around! Outlook= not so great hold on to your hats... Dow 5000?

98 Brokra
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post #14 of 14 (permalink) Old 03-05-2009, 08:48 AM
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it pains me to say it but i remember life before credit cards . i had good bank credit but no charge cards. i had to pay 20% down on my first house . if not for the credit cards being passed out like candy most folks would not be in the mess they are in . just too easy to get . imho this is all just another adjustment . tighten your belt a little for it will pass. new fortunes are made when stocks tank . young guns will buy in low and ride it out . people will be forced to live within their means . credit is a two sided sword .

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