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Coach1310

How far do we go.....

31 posts in this topic

before we hit the bottom? Just wondering what thoughts people have on when the economy will turn around. I would love to hear from some folks who have background, positions in economics and the like who have some inherit knowledge of the inner workings of the problem and possible solution.

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CHICAGO - The bear market that is ravaging investor portfolios is now one of the worst in modern U.S. history and has wiped out more than $7 trillion in shareholder value, with no bottom clearly in sight.

When it stops and how far it drops, no one can predict with any accuracy — a painful uncertainty underscored by Wall Street's giddy mood at the moment the steep descent began.

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before we hit the bottom? Just wondering what thoughts people have on when the economy will turn around. I would love to hear from some folks who have background, positions in economics and the like who have some inherit knowledge of the inner workings of the problem and possible solution.

Not to spew my same rhetoric, but this is all about energy. The latest economic fiasco is a hiccup that resulted from the decline in consumption due to energy related costs. If energy inflation didn't occur, the game could have continued for some years. Yes, the overly leveraged banks would still be a bomb, but without the fuse lit, they could have continued.

The world cannot continually increase energy consumption to fuel growth barring the development of a new revolutionary energy technology or broad support and willpower for our current sources to expand. Even with support and will, we have natural limits that we need to accept that are ignored by most economists. I wholly believe that we need to both invest in Nuclear fission reactors asap as our primary solution and invest heavily in renewable as an employment scheme to re-build the middle class. Clean coal and NG also need to be expanded, but these are short term fixes to what hopefully is regarded as a long term game plan. Contrary to what economist like to spout, we cannot grow ourselves out of this problem with our current energy economy.

In regards to the bottom of the stock market. I hold the firm belief that true resource/asset based valuation lies somewhere around 6k-8k for the DOW with very restricted growth from there. There is still lots of digital money that doesn't have a resource based place holder that will drop IMO. Lots of indicators are currently pointing to a quick turn in real estate as an investment. Real estate does look smart right now if the location is good (and you have cash.)

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He has to be, he owns a fricking sweet boat.! hehehe

anyways, that is a very good theory and well said.

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Blueroof, what do you do for a living? Are you in the economic/financial realm?

No, I have a clean conscience for the most part. I work in physics education - should have put a disclaimer that I don't work in the financial realm and am whoafully under qualified to give investment advice! blush I've spent over 15 years researching the issues involved with energy and economics and understand the math involved very well. I'm an advocate of deep economy economics and think that is the best path for long term progress. Current economic growth mandates are selling out our future IMO. The global economy is a lost cause without big energy, local economy is our future.

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Originally Posted By: nofishfisherman
Blueroof, what do you do for a living? Are you in the economic/financial realm?

No, I have a clean conscience for the most part. I work in physics education - should have put a disclaimer that I don't work in the financial realm and am whoafully under qualified to give investment advice! blush I've spent over 15 years researching the issues involved with energy and economics and understand the math involved very well. I'm an advocate of deep economy economics and think that is the best path for long term progress. Current economic growth mandates are selling out our future IMO. The global economy is a lost cause without big energy, local economy is our future.

Blueroof, On a personal level I want to agree that a local economy is our future but there are so many facets to make this a reality. Yes through solar, wind etc. we can bring "energy home" but what about the other facets of our lives? Are we going to start making our own clothes etc? I am not trying to be sarcastic I just see that the world has become to interdependent that how can we go back to a local economy. I personally am taken by the idea of running my house on solar, growing/hunting everything I eat, the wife sewing our cloths smile bartering for eggs and flour but I just do not see this happening. But If it is going to start somewhere energy just may be that starting point.

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I can't agree or disagree with anyone here because I don't know any better either way. One thing I think is a problem, like has been mentioned is we don't make anything here. Our country is so dependent on things from other countries, continents, etc. We need to bring production back to the US for some of the everydays items like clothes, etc. The closer we get it to home, the less middle men we have. If you buy something that was made in China it has problem switched hands about a dozen times before you buy it. It costs $1 to make, but the manufacturer sells it for $2 to a wholesaler. He sells it for $4 to another company. That company sells it to other companies and buyers for $6 etc. etc. until it hits the store shelves at $30. I always hear that companies have to produce in developing countries to keep costs down, but if they brought it to the USA and payed employees a decent wage, we could make up the $$$ by eliminating the tons and tons of middle men. Maybe I am dreaming, but we don't have enought "REAL" economy in our country anymore. We don't make anything. We have tons of "SERVICE" businesses, but very little "PRODUCT" businesses. Just my take.

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Good in theory Coach and I agree with you. Problem is, no one here wants to work the lower paying job to make the stuff and keep costs low.

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The true problem in 95% of people will buy what ever is cheapest no matter were it is made. As recent as 10 years ago Levis made ALLOT of there jeans in the US but they had to charge $36.00 pair for them because of wages gov regs etc. (I am not at all saying this is bad) but Target (just one example) is charging $29.00 pair for there imported jeans. And guess what, people bought the cheaper jeans and could care less were there were made. So Levis has no choice but to follow the trend and start closing there US plants or go out of business. We can beat on companies for moving things overseas but the reason this happens is people want to buy things CHEAP and could care less were it was made. Go drive through the parking lot of the ford plant in st paul and what do you see? Not fords. And these are people building Fords! Until we are willing to pay a littler more for things we buy manufacturing in never going to come back to this country in any meaningful way. Unless we want to lower the min. wage, relax labour laws etc. (Which I do not agree with) it is ever going to happen.

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I don't think the middle or lower class can afford to buy based on priciples.

I would buy American but I would need to get a 10-15% raise to do it and maintain my current lifestyle. Most of us can't afford the luxury of principles any more. Its a sad fact.

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Good in theory Coach and I agree with you. Problem is, no one here wants to work the lower paying job to make the stuff and keep costs low.

I agree with you, but sometime soon we may not have a choice. I'm torn because I don't want things to get worse, but at the same time every once in a while you need some adversity to get rid of the bad businesses who's shotty work and business practices just don't cut it.

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Originally Posted By: Sandmannd
Good in theory Coach and I agree with you. Problem is, no one here wants to work the lower paying job to make the stuff and keep costs low.

I agree with you, but sometime soon we may not have a choice. I'm torn because I don't want things to get worse, but at the same time every once in a while you need some adversity to get rid of the bad businesses who's shotty work and business practices just don't cut it.

And then we just have to hope and pray that we don't work for one of those businesses that aren't going to make it.

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I don't think the middle or lower class can afford to buy based on priciples.

I would buy American but I would need to get a 10-15% raise to do it and maintain my current lifestyle. Most of us can't afford the luxury of principles any more. Its a sad fact.

Please do not take my post as in any way saying if someone buys on price they are doing a bad thing. I was just trying to point out one reason why we do not have certain type of manf. being done in this country anymore. $1.00 a roll for TP from the local place or $5.00 for 12 rolls from walmart. I see why people make the choices they do. We all hate the idea of a trade deficit but at the same time we benefit from it based on lower prices. Rock and a hard spot IMO

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I get what you were saying. I didn't see your post as blaming the people buying on price.

I was just pointing out that even if someone wanted to buy american out of principle those principles are starting to get very expensive while money is getting tighter and tighter each year for the average american family.

Watch me turn this into a pro Democrat post... grin

Maybe if we can increase the wealth of the middle class we will see people buying based on principles again which would see an increase in manufacturing in America. Its a long shot for it to work out that simply but its a nice thought anyways.

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I get what you were saying. I didn't see your post as blaming the people buying on price.

I was just pointing out that even if someone wanted to buy american out of principle those principles are starting to get very expensive while money is getting tighter and tighter each year for the average american family.

Watch me turn this into a pro Democrat post... grin

Maybe if we can increase the wealth of the middle class we will see people buying based on principles again which would see an increase in manufacturing in America. Its a long shot for it to work out that simply but its a nice thought anyways.

I am ALL for increasing the wealth of the middle class, but the million dollar question is how? Free market or gov. mandates? I tend to lean to the side of free markets but that is only because I see it as being more successful in doing this than gov. controled income distribution. The opportunity to get ahead has IMO it the great motivator. Work hard and you have the opportunity to send you kids to collage etc. vs the gov. will that care of you wether you sacrificed or not. The easiest thing in life to do is to plug along and do just enough to get by and expect others to take care of you when you falter. I am a big believer in making sure the people who really need help get it but I have a problem with the ones that expect others to catch them when they fall because of there own actions. Somedays I feel like I just want to say f__k it but I get up and try to make a difference in this world, it not for me for my kids. The easiest thing I would ever do is sit back and expect/hope others will do the hard work for me.

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One thing I think is a problem, like has been mentioned is we don't make anything here. Our country is so dependent on things from other countries, continents, etc. .

I took just part of your quote, Coach...because I think this is an important point. In past recessions, people would stop buying a lot of things like durable goods and luxury items, and then the economy would recover once that pent up demand started to manifest itself and people started to buy things again.

But now, when that demand starts to manifest itself, those products that will be purchased will be manufactured in other countries.

This makes it hard to read how this current recession (I'll go ahead and call it a recession...the definition is being hashed in another thread somewhere...) will recover.

It will take a while for lending institutions to absorb their losses, and then start lending again. It will take a while for people and families to absorb the loss in the value of their home.

But there is still money out there. And as stocks get ever cheaper, some people will begin to take advantage and buy...because there will be good values to be had. And then stores and hotels and restaurants will start to see things improve, and contractors and builders - who are desperate for work - will give good prices on bids; and those businesses will take advantage of suddenly lower real estate and construction costs. But that will take some credit availability.

Hard to say how long it will take. 9 months? 18 months? A few indicators to look for that the economy will turn back around:

Once the stock market has dropped (and it will likely drop some more), it will stabilize and trading (volume) will be low. When volume of trading begins to pick up consistently, and the market is no longer dropping, that could be an indication that traders think the market has bottomed and is primed for a comeback.

Watch local advertising...when local lenders start advertising for home mortgages or car loans again, that will be an indication that they are again able to start extending credit.

When you start seeing construction and business remodeling starting to take place (maybe some renovation work in soon-to-be closed restaurants), another indication that either lenders are making credit available again, or those with wealth are beginning to invest it.

There will be people in position to take advantage of cheap building (labor) costs and devalued real estate. When that starts to happen, it will roll back up (or trickle down?) into the economy as a whole.

But it will recover.

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Quote:
Good in theory Coach and I agree with you. Problem is, no one here wants to work the lower paying job to make the stuff and keep costs low.

It is not only that, but something else to consider is that many manufacturing plants in the US are old, the technology is old and the machinery is old. I don't care how cheap you work if you are using old crappy junk you can't produce the same product as cheaply as they can with new equipment. I used to work in a machine shop where most of the machine were 80 years old. There was no way we compete with the plants overseas, so they finally closed the doors.

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Originally Posted By: nofishfisherman
I get what you were saying. I didn't see your post as blaming the people buying on price.

I was just pointing out that even if someone wanted to buy american out of principle those principles are starting to get very expensive while money is getting tighter and tighter each year for the average american family.

Watch me turn this into a pro Democrat post... grin

Maybe if we can increase the wealth of the middle class we will see people buying based on principles again which would see an increase in manufacturing in America. Its a long shot for it to work out that simply but its a nice thought anyways.

I am ALL for increasing the wealth of the middle class, but the million dollar question is how? Free market or gov. mandates? I tend to lean to the side of free markets but that is only because I see it as being more successful in doing this than gov. controled income distribution. The opportunity to get ahead has IMO it the great motivator. Work hard and you have the opportunity to send you kids to collage etc. vs the gov. will that care of you wether you sacrificed or not. The easiest thing in life to do is to plug along and do just enough to get by and expect others to take care of you when you falter. I am a big believer in making sure the people who really need help get it but I have a problem with the ones that expect others to catch them when they fall because of there own actions. Somedays I feel like I just want to say f__k it but I get up and try to make a difference in this world, it not for me for my kids. The easiest thing I would ever do is sit back and expect/hope others will do the hard work for me.

I guess my problem with the free market concept is that we have seen it fail the middle class time and time again. We all have the opportunity to get ahead that is true, but how do you expect the middle class to get ahead when the average raise doesn't even come close to keeping up with inflation. I worked very hard last year and just go my raise, I got the very top end my company offers and yet it is below the current rate of inflation. So next year despite my hard I'll be behind where I am right now.

Hard work doesn't promise you anything any more. Hard work might get a single individual ahead but I'm talking about the entire middle class as a whole. And I think thats the big difference. IMO the free market ideas seem to focus on letting only a single person make him or herself a success through hard work. In the free market you will never seen the masses succeed, hard work or not. A few will get through but the masses of the middle class will not.

I guess I just don't get why government should be set up to help the wealthiest 10% of the country. There are 300,000,000 people in America, why would we set up a system that only helps 10% of them and forgets about the other 270,000,000. It sounds like you don't want to help the 270,000,000 because you are afraid that a few undeserving people might catch a break. Its probably true but I'd rather see a few bums catch a break then see the entire middle class fall further and further behind each year. Since the middle class falls further and further behind each year if we keep up the current trends we'll all be asking the top 10% for handouts beucase we'll be so far behind.

Hopefully this posts makes sense, its kind of late for such thinking.

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Yes your post makes sense nofishfisherman but it does have a hint of socialism in it smile

a few of your statements stood out to me "hard work doesn't promise you anything anymore" I do not know when it ever did "promise" a person anything. This thinking that there has to be some short of guarantee troubles me. But I also know that it is becoming more and more common in todays world.

and "hard work might get a single individual ahead but I'm talking about the entire middle class as a whole" I am not quit sure of your point here as we are all individuals that make up the whole. If each individual does well the whole does well right? I do not know how we can bring up the whole without bringing up the individual first.

and "why would we set up a system that only helps 10% of them and forgets about the other 270,000,000" How does our system "help" the 10%? Also of the people in this so called 10% most were not always in the that 10% they were in the other 90% and moved up into the 10%. And some that were in the 10% have moved down into the other 90%. People move in and out of income brackets all the time just as people move in and out of the lower 10%. Sometimes I get the impression that people think a person just wakes up one day and they are in that magical top 10%. I guess I would be considered to be in the top 10% now but you know were I was before that? in the bottom 90% (and not the high end of this 90%) and that was not very long a ago I might add.

and "It sounds like you don't want to help the 270,000,000 because you are afraid that a few undeserving people might catch a break" I honestly do not see were you got that from my post but if I did come across that way I apologize to anyone who took it that way. Believe me that is the LAST thing I would worried about.

and lastly "in a free market you never see the masses succeed" In what system do you see the masses succeed? Socialism, communism, dictatorship? I believe our system has allowed more people to move up the economic ladder than any other system in the world has. Also I do not think there is one person on here that does not want the "masses" to succeed the question is how to do this? If there is a better system besides opportunity I have not heard of it yet.

Now please do not take this as I was slamming on you because I am not. Only trying further the discussion.

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Quote:
Hard work doesn't promise you anything any more. Hard work might get a single individual ahead but I'm talking about the entire middle class as a whole. And I think thats the big difference. IMO the free market ideas seem to focus on letting only a single person make him or herself a success through hard work. In the free market you will never seen the masses succeed, hard work or not. A few will get through but the masses of the middle class will not.

Unions have helped this in the past. There is strength in numbers. But they too have got to be big business,with many more worried about their cushy jobs than they are with helping their members. And before any union members flame me I was a union officer in a local union in the past so what I am saying is first hand experience.

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How does our system "help" the 10%?

If I see the top 10% get richer and the bottom 90% getting poorer something seems skewed. I know that the top 10% isn't getting more just by mere hard work alone so what else is causing the income gap to widen year after year?

Currently the top 10% are given tax breaks to promote growth. The idea is that this wealth at the top will trickle down throughout the rest of America. If it actually worked that way we wouldn't see middle class paychecks getting smaller while upper class paychecks are getting bigger.

Just look at a typical company. The senior management is upper class, your regular workers are middle class. When times are tough the upper management decides to reduce benefits, reduce the amount of raises, and cut staff all in an attempt to maintain or raise profits. This leaves those middle class workers to live another year at the same salary while having to pay more for their health insurance and thats only if they got to keep their job. While in general the upper level enjoys bonuses and increased pay for generating profits when they only come at the expense of the middle class workers.

I agree that in an ideal world the free market would be the way to go. I don't advocate socialism but I do think that the free market could use a helping hand. Really I don't think there is any one system that holds all the answers.

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"when time are tough the upper management decides to reduce benefits, reduce the amount of raises, and cut staff in an attempt to maintain or raise profits" Have you thought maybe the company needed to do it to survive not to maintain or raise profits? If a business fails everyone loses, the owner, the employees, etc. As a business owner I can assure you there is not some master plan to keep down the masses. Are there bad business out there that would do what you state? yes there are but there are allot more good ones out there IMO. Just the other day I gave one of my employees an 8% raise. Did I have to in this economic environment? No. But I did because I felt he deserved it and I knew he what really appreciate it. Even if it meant less "profit" (which there is very little of these days) for the company. Maybe if you work for one of the bad ones you should change jobs.

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But look at the recent list of bad ones, giving CEOs Heavy monies while their failing.Then rely on us to bail em??

How many stories in papers and news stating record profits and only the companies higher up see any of the good times from these record profits. Nothing is passed along anymore.Wheres the trickle down that is suppose to reach even a consumer.

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fishorgolf, maybe you're not evil but there are many CEOs that are. Maybe they can learn from you, and probably should. Maybe I can work for you too? haha

Anyways, the person that laid me off in my last job...had never seen me. The person who gave me a very nice raise and more authority said he had no choice and it was a corperate order. I like to believe I was a good worker based on what my GM said.

As for changing jobs...you probably could say that 8 years ago. However, these situations has movtivated me even more to get my degree.

I stay firm to the trickle up theory. I want to be on the upside with my boat smile

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