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MzMia -> RE: The End of Prosperity/Fasten your seats, its going to be a bumpy ride (10/7/2008 2:45:55 PM)
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quote:
ORIGINAL: TNstepsout
I agree with MzMia that we very well could find ourselves facing a Depression. Yes we have policies in place that did not exist in the 30's but we also have additional problems the US did not face at that time.
1. Debt is a huge problem. Right now the total debt (and we're not talking corporate or government, we are talking personal debt) is greater than the total income in our country. With ages falling and unemployment, that divide will only grow. In the 30's credit also freely flowed, but primarily among the wealthy. The average middle class American was not in debt as they are now.
2. Our dependence on oil was not as great as it is now. Our prosperity and our economy developed largely because of the automobile and oil and we are highly dependent on it. We are still feeling the effects of the peak in oil prices earlier this summer, prices have only moderately gone down at the pump and the price to heat/cool homes is still very high.
3. The world economy is much more enmeshed than it was in the 30's. The recent boom in our economy was largely driven by emerging markets. China and other Asian countries have fallen off the map in recent months in terms of their economic contribution. Their economies are slowing drastically. Orders are being canceled. We also relied on their cheap imports to keep our daily expenses down, with the cost to produce increasing in Asian countries, those costs will begin to increase.
4. We have far more people in cities and suburbs than we did in the 30's. While there was less work in those areas, there was also the ability to be more self-sufficient.
5. Far more jobs are derived from "non-essential" goods and services than in the 30's. The restaurant industry, retail industry, entertainment, etc.... are all huge employers. With belts tightening people reduce things that are non-essential and many of these kinds of businesses will fail. Because we have automated so much manual and tedious labor, we have also reduced the need for those kinds of jobs.
6. The fail safes put in place have not kept pace with the value of money today. Just last week the FDIC insurance cap was finally increased to $250,000. Unemployment and Social Security have not kept up either. How many of you can get by on $175 per week! As for SS, how many of us expect it to be around by the time we retire?
7. Far more people have exposure to the stock market than in the 30's. Internet has made it available to anyone with a computer and many 401k's and IRA's are invested in the market in one way or another. The gov has been pushing 401ks' and IRA's for years to relieve the burden on the SS system. Now all those people who have their life saving tied up in these instruments are watching the values plummet and there's nothing they can do about it. What happens when millions of baby boomers suddenly can't retire as planned? That's more people in the job market competing for existing jobs.
8. We are far less independent agriculturally than we were in the 30's. Farming was the life blood of our nation at that time, now we import much of our food.
I think we are actually far more vulnerable now than we were then. We comfort ourselves by believing that because we once experienced a Great Depression that it can't happen again. Now days our leaders know from history what can happen and how to avoid it. But do they? How long did it take our leaders to act before something was done? Then when they did, it devolved into petty bickering and party politics. Are our leaders really any more aware and equipped than they were in the 30's? I once thought so, but recent weeks have caused me to reconsider.
In terms of where we are now in unemployment rates etc.... The beginning of the Great Depression was signaled by the stock market crash of 1929, however the truly bad times of the Depression were not felt, nor did economists consider the depression as beginning until 1932, aprx. three years later. In 1929 when the market crashes, unemployment was much lower than it is now. It was only until 1932 that the high rates of 25% were seen. If we are experiencing a deep recession or even a depression, we are only in the beginning stages. We have to compare our unemployment numbers and other factors to the beginning of other recessions and depressions NOT the middle. Unless you just want to make yourself feel better, which is understandable.
[sm=applause.gif][sm=applause.gif]
I am giving the pretty lady from TN a standing ovation for
explaining our economic situation so eloquently!
Bravo!
I could never have explained it so well, YOU are our
CollarMe, economic advisor!
HELL, you should be working for the government, they sure the hell
need someone on board like you!
I am far from happy about our economic situation, but I am also the
type of person that wants to know the truth about our situation.
Don't piss on my leg and tell me its raining.
The American people need to wake up to what our situation IS, so that
we be better EQUIPPED mentally, financially and spiritually for what is coming
are way.
Many smart people see and understand the "changing times" and are doing what
they can to try to keep themselves and their loved ones out of dire straits.
I started changing many of my attitudes and habits about 9 months ago, and
I am thankful, as I tighten up even more for the bumpy roads ahead.
Many people are going to learn to budget, clip coupons, and stretch their dollars
like they never have before.
In the end, maybe for many it might create a better appreciation for the things
that count the most in life.
Many people are going to learn how to get down to basics.
People lived, worked, got married and had children during the Depression,
in fact my mom was born in the middle of the Depression.
We will certainly survive this situation, but pretending it does not exist or
it's just not that bad really, is for people in DENIAL.
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