Defconomy - Are we headed for a severe depression?

Discussion in 'Politics, Religion, Social Issues' started by fivepoint, Sep 25, 2008.

  1. fivepoint macrumors 65816

    fivepoint

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    IOWA
    #1
    I found this article on CNN, and found it particularly interesting. Does Defconomy Three sound familiar to you?
    http://www.cnn.com/2008/US/02/28/beck.commentary/index.html


     
  2. leekohler macrumors G5

    leekohler

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    Chicago, Illinois
    #2
    Three sounds very familiar. I think I just saw it this morning.
     
  3. iShater macrumors 604

    iShater

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  4. LethalWolfe macrumors G3

    LethalWolfe

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    #4
    Does this mean it's almost make a run on the bank and stuff my mattress full of bills time?


    Lethal
     
  5. atszyman macrumors 68020

    atszyman

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    Sep 16, 2003
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    #5
    Nah, this one won't matter if you have a mattress stuffed with bills or not. With nothing backing our currency, it will soon not be worth the paper it's printed on.

    Get it all in pennies at least then you can sell the copper and other metals for something.:D
     
  6. Thanatoast macrumors 6502a

    Thanatoast

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    Denver
    #6
    No, our leaders are about to take out another loan and put it off for another few years. I'll be interested to see what the tipping point is to make other countries stop buying our debt, though.
    At the moment we only spend about three hundred billion a year on servicing our debt, which is only about 14% of our yearly budget.
     
  7. Rodimus Prime macrumors G4

    Rodimus Prime

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    Oct 9, 2006
    #7
    people need to remember that what ever happening right now in the US is going to have world wide effects and it is going to hurt world wide.

    Everyone needs to remember we are now more of a GLOBAL economy so while there will be lag time it is going to have huge and painful effects world wide.
    Credit markets tighting up in the US means it is going to happen over seas as well and cause a lot of problems there.

    People who are going to weather this storm the best are ones who do not have credit card debt. Do not own a house or pay rent at the limit of there means. Have some savings built up they can draw upon.

    I hope things shape up credit wise because yes I do want to get a new car next year and would need to take on the debt to be able to get it.

    I would like to point out that it would be worked out not to break my bank and still allow me to put away each month between 5-10% of my gross income in to a savings account.
     
  8. Ugg macrumors 68000

    Ugg

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    Penryn
    #8
    That's a rather broad brush you're using...

    Spain, England and Ireland are also facing housing meltdowns, but Germany and France are doing just fine and Brazil, Russia, India and China are too. Not only are these major emerging economies doing well, they're less dependent upon what happens in the US. Probably the biggest impact will be the loss of American tourists as the US dollar continues its seemingly inexorable slide.

    Will the global economy slow somewhat? Sure, will it fall into a recession as deep as the US? Probably not. The dynamics have changed.
     
  9. Desertrat macrumors newbie

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    Jul 4, 2003
    Location:
    Terlingua, Texas
    #9
    I've grumped before about GDP: If it's not indexed to the country's inflation rate, how is its "growth" realistic? At present, China's GDP growth is said to have slowed from around 12% down to around 8% or 9%. However, the inflation rate in China is said to be around 12%.

    So I dunno how much impact any notable reduction in our consumer spending on Chinese-made goods will cause. Certainly a slowdown here will hurt them. Next problem country could be Germany, since so much of its financial health depends on exports--although the US is not all that large a percentage.

    I'm reading that the losses in worldwide credit markets are now totalling around some $3 trillion. That's a bunch. How accurate? I dunno. But it means a further strictness about lending, with higher credit ratings required. And, for such as houses, much higher down payments after demonstrably-accurate appraisals.

    The bailout merely worsens the consumer inflation problem. "Cash for Trash" won't help the dollar's purchasing power; quite the contrary. I've read estimates that $700 billion is about half as much as actually would be needed, and roughly one-third of the total amount of final spending.

    IOW, screw all taxpayers, of whatever tax bracket.

    All this financial misery can only be paid off by raising taxes to the point that a ton of money is taken out of the economy. That means less investment capital, which seriously impacts jobs. "Damned if you do; damned if you don't." So, tax policy will play a role.

    Argh. I guess that I just don't see a way that we'll avoid a seriously bad period. The Great Depression saw unemployment rise to 25%. I've no clue if we'll reach that level, but the question then is how do folks survive when the government's safety net is ripped apart? When just printing money to hand out as "unemployment" won't really buy much? Even 20% unemployment is right at 30 million out of work, vice some 8 million at present.

    FWIW, 'Rat
     
  10. stevegmu macrumors regular

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    Jan 29, 2008
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    #10
    Doesn't the Eurozone have well over 7% unemployment, and higher inflation? What would that make them, if we are in Great Depression 2?
     
  11. Rodimus Prime macrumors G4

    Rodimus Prime

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    Oct 9, 2006
    #11

    never said it would be as bad but to think that the entire world would not be feeling the pain. You just listed 3 other countries in housing pains and it is spreading. It will be a world wide credit crunch. No if and or buts about it.

    It is a domino effect. Part of the housing problem now is because of the domino effect. Quite a few loans are feeling not because when they where given they where bad loans but good. Just the effect of the rest of the mess caused them to hurt.

    It is going to be very painful world wide and the entire world will be hurt. US might end up being the worse off but everyone else is going to bad shape as well.
     
  12. Agathon macrumors 6502a

    Agathon

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    Jan 19, 2004
    #12
    Are you for real? Do you think the government withdraws tax payments from its bank account and burns the notes, or converts it into gold which it ceremonially throws into a volcano?

    The government takes the money you pay in tax and spends it on things. It never leaves the economy. The only difference is that it is part of your income the state makes you spend on certain things rather than leaving you to spend yourself. There is an obvious reason why every developed country follows this basic scheme.
     
  13. Agathon macrumors 6502a

    Agathon

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    Jan 19, 2004
    #13
    You keep believing that. Ridding the world of US financial dominance and destroying the dollar as a reserve currency benefits everyone else in the long run, since the US has demonstrated that it is a financial (and political, and diplomatic) basket case.

    This is like one of those cases where you pull off a sticking plaster to change it. It is painful, but for long term gain. The only thing that loses in the long term is the sore.
     
  14. Queso macrumors G4

    Joined:
    Mar 4, 2006
    #14
    You aren't in Great Depression 2, whatever the newspaper hype is trying to make out. However, thanks to the far higher levels of personal debt in the USA compared to the EU any contraction in the finance industry is going to have much greater effects on your side of The Pond (UK excepted). I've been saying this for nearly two years now. The Eurozone is the area best placed to weather this storm. Mostly internal trade, social welfare systems already in place and low levels of debt both from governments and the general population. The rest of the West looks like a house of cards in comparison.
     
  15. Rodimus Prime macrumors G4

    Rodimus Prime

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    Oct 9, 2006
    #15
    you clearly do not understand the global economy. It would not matter if the Euro was the money of the world. The US system current condition will cause massive pain world wide. You can not have the number 2 economy in the world go into a massive recession with out it taking everyone else. If the EU went into a massive recession it would take the rest of the world with it (currently number 1 economy if you count the EU as a whole other wise the US takes top spot). The last major recession in the world was around 2001 and that one was caused by the EU. It was number 2 at the time.

    NO WHERE DID I say it is the dollar having the effect. It is the global economy having that problem

    This is not going to change the dollar off the being the bases of trade. History has shown that much. Look how long it took the British pound no longer to be the world's bases of trade. It was a long time after the US became the number one economy in the world.
     

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