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How bad "IS" the economy going to get?

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Started 3 years ago by turnedNOTburned
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turnedNOTburned
Grandview/Columbus, Ohio
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So, $5 gas, Columbus is running short on cash, , rising unemployment, inflation concerns domestically and abroad, etc....
I've never been one to give into fear (as sold by the media), but, given the shear AMOUNT of bad news coming in, its starting to carry some weight for me.
My concerns are two fold:
1.) What is being done now? (Congress/Fed, etc, seem to be more concerned with the election than the state of the union)
2.) What are likely scenarios for how this is going to play out?
I could see a lean/tight summer into winter, with things hopefully clearing up around next spring as we adapt to higher energy costs. It seems like the economy runs in cycles - 2 bad years, 5 good? I've heard some NPR reports that point to Oil future trading as the driver of higher prices, no real shortage - just speculation of shortage. Financial Markets don't seem great, but, they're not in the headlines like they were, leading me to believe they are at least on the road to recovery.
Where does Iraq play into the whole energy/oil situation? As much as I hate the war, I would still expect to see some Oil flowing from there to here at some point.
I don't know the answers are, but, given the mass of intelligence that hangs on CU, I bet we could come up with some good guesses.
- Devo

Posted 3 years ago #
Rockmastermike
CORNspiracy HQ
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I'll comment on the things I know about...
turnedandburned wrote
I've heard some NPR reports that point to Oil future trading as the driver of higher prices, no real shortage - just speculation of shortage.
That line is being sold far and wide by the oil industry by way of "everythings fine.. dont worry... we'll take care of you... keep giving us tax breaks". The reality is that production increases have not kept pace with demand increases, new oil finds are not keeping up with expectations. Many widely publicized oil field discoveries have turned out to be vastly overstated, and many of those are heavy product finds which do not produce with conventional methods or produce only very slowly with massive energy input requirements.
this all certainly feeds futures speculators rather well, and that is in the end what defines the price of oil.
Where does Iraq play into the whole energy/oil situation? As much as I hate the war, I would still expect to see some Oil flowing from there to here at some point.
the war has served more to help drive oil prices up by destabilizing elements of production across the entire region than it has served to somehow magically provide an endless supply of oil. Given how much money certain parties have made on oil stock ownership this is hardly a surprising outcome.

Posted 3 years ago #
turnedNOTburned
Grandview/Columbus, Ohio
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My big concern is, I've got to make some decisions about things like Job, car purchase, should I teach more woodworking classes as opposed to doing art shows, etc.
I'm thinking "playing it safe" might be the way to go in the short term until the haze settles, but, then again, no risk no gain.

Posted 3 years ago #
gramarye
In Exile
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Ironically, some big international deals in the business world in the past month suggest that foreigners' faith in America and the American dollar may actually be overtaking native sentiment.
The fact is, foreign investors have an enormous stake in America today. From 2000 to 2007, foreigners bought some $6.3 trillion in U.S. securities, including stocks and bonds. That's more than three times what they bought in the go-go 1990s. America's still a great place to invest Ã¢â‚¬â€ especially if you're a foreigner.
Does it matter who owns assets? Maybe sometimes, but usually not. It's a vote of confidence in the U.S., and helps support U.S. jobs and incomes. The investments also boost our productivity and make up for our lack of savings.
By the way, the last time this happened, in the late 1980s, the Japanese were the buyers. Many Americans feared Japan would "buy up" the U.S., and put us all out of work. Indeed, Japan owned huge swaths of popular U.S. real estate Ã¢â‚¬â€ from Rockefeller Center to the Pebble Beach golf resort. A popular novel about Japan's investments, "Rising Sun," was even made into a movie. But since then, Japan has retrenched, while the U.S. has grown strongly.
So don't worry. As Italy's Valter Mainetti, who heads Sorgente, explained to Time.com: "This current crisis will pass and the dollar will reestablish itself. We are confident."
Sad, but it seems sometimes foreigners have more confidence in America than we do.
As for lowering the price of oil, Congress is not serious about it, and neither is the current administration nor either presidential candidate. They keep talking windfall taxes, gas tax holidays, suing OPEC, and doing just about anything but the only thing that actually alleviates a shortage, which is letting supply increase to match demand. This goes well beyond ANWR; we have prodigious deposits elsewhere that we're simply not letting domestic producers touch. That means the price will stay high and that most of the money from those higher prices will go abroad.
I'm all for increasing drilling wherever and however we can as quickly as we can, but that's more because I feel for the specific pain of blue-collar rural workers (who have been absolutely crucified by rising fuel prices). The effect on the larger economy will be negative, but I think we've lost a lot of perspective if we start thinking of this as the end of Western civilization. We've stomached far, far worse within living memory.
Obviously, playing it safe is generally a good bet in any uncertain environment; that's just a basic life lesson. Just don't cross the line from caution to paranoia.

Posted 3 years ago #
Bear
The woods
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gramarye wrote I think we've lost a lot of perspective if we start thinking of this as the end of Western civilization. We've stomached far, far worse within living memory.
Yes and no -- no on the narrow question of gas prices:
-- but yes on the broader question of our reaction to them. I remember living through the 1970s as a kid, and there were days when you couldn't get gas because your license plate didn't end in an even (or odd) number. We read a story in the paper about a guy who cut into line at the gas station; the guy he cut in front of was so mad that he removed his own locking gas cap, locked it onto the offender's gas tank, and drove away. It was ugly.

Posted 3 years ago #
turnedNOTburned
Grandview/Columbus, Ohio
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gramarye wrote
Obviously, playing it safe is generally a good bet in any uncertain environment; that's just a basic life lesson. Just don't cross the line from caution to paranoia.
Right on...
This made me think of the Great Depression, and to the gas shortages in 70's to a small degree, and how we don't have any current perspective on what truly hard times ARE. Testing your limits is such a strong character builder. Not to chuck rocks at Emo's, but, what would their life and personalities be like if they were faced with the challenge of mortal survival?

Posted 3 years ago #
lifeliberty
Here
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I like to think I would pick up hunting and fish more.

Posted 3 years ago #
catnfiddle
Giant Corncob District
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Backyard gardens are also a great way to go!

Posted 3 years ago #
lifeliberty
Here
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catnfiddle wrote Backyard gardens are also a great way to go!
You can't plant and grow meat silly! :wink:

Posted 3 years ago #
WILDMAN
Westerville, Ohio
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with unemployment, it is crazy on how companies are doing cut backs and other companies not hiring. i have been out of a full time job since late april and still have not had any luck with finding a good job. i have had some call backs but the pay is soooooooo low. i have a great resume(not to sound cocky but i do have a great work background) but with 50+ people applying for the same job, its hard to even get an interview. 5 years ago, it would be easy to get on with a great company. These days, its all about who you know, not what you know.

Posted 3 years ago #
Andrew Hall
Dennison Place (The Circles)
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gramarye wrote Ironically, some big international deals in the business world in the past month suggest that foreigners' faith in America and the American dollar may actually be overtaking native sentiment.
The fact is, foreign investors have an enormous stake in America today. From 2000 to 2007, foreigners bought some $6.3 trillion in U.S. securities, including stocks and bonds. That's more than three times what they bought in the go-go 1990s. America's still a great place to invest Ã¢â‚¬â€ especially if you're a foreigner.
That statement you quoted is very misleading. Those 6.3 trillions were in no small part due to the mortgage-backed securities and related that all the Street was selling to foreign investors who couldn't get enough. Those are what crashed down hard with the current 'credit crisis.'
I don't disagree with the fundamental point of the article, but using 2000-2007 data is disingenous, at best.
A.

Posted 3 years ago #
TheOtherZach
Zackass
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Part of the reason we're in our current state is the market realities behind oil prices, of course. Another huge chunk is the credit crunch. This American Life aired a pretty amazing episode a few weeks ago regarding how exactly the mortgage crisis came about.
http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1242
It's a great listen and it explains why although we're not quite on the brink of the 1930's, we may be looking at the 70's.

Posted 3 years ago #
lifeliberty
Here
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I love the 70s! Bring it back, disco Baby!

Posted 3 years ago #
gramarye
In Exile
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Andrew Hall wrote
gramarye wrote Ironically, some big international deals in the business world in the past month suggest that foreigners' faith in America and the American dollar may actually be overtaking native sentiment.
The fact is, foreign investors have an enormous stake in America today. From 2000 to 2007, foreigners bought some $6.3 trillion in U.S. securities, including stocks and bonds. That's more than three times what they bought in the go-go 1990s. America's still a great place to invest Ã¢â‚¬â€ especially if you're a foreigner.
That statement you quoted is very misleading. Those 6.3 trillions were in no small part due to the mortgage-backed securities and related that all the Street was selling to foreign investors who couldn't get enough. Those are what crashed down hard with the current 'credit crisis.'
I don't disagree with the fundamental point of the article, but using 2000-2007 data is disingenous, at best.
A.
By the numbers I've seen, the subprime crisis took away billions, even hundreds of billions ... not trillions. The visibility of the mortgage market, and its salience to everyday quality-of-life issues for people who otherwise don't have much exposure to the games I-bankers play, are what have given it such an ostentatious profile. It's true that no other industries of any substantial size have been having blockbuster years, so the overall growth stats are unimpressive, and Congress, the White House, and the Federal Reserve can be justifiably criticized for the ill discipline that contributed to that. However, the numbers still suggest that, even despite that, foreign investors are still reasonably upbeat about America's fundamentals.
Foreign investors who looked at the American subprime mortgage securitization game as a get-rich-quick scheme, or as a can't-lose investment, obviously got burned just as much as Americans who fell prey to those same fantasies did. The rough justice of the market doesn't respect international borders. However, I think the numbers support the conclusion that the subprime meltdown hasn't deterred investment in America--it's just deterred investment in the subprime mortgage market, of course. (On the flip side, however, it's also spurred some very high-profile and high-value investments in American banks who let themselves get burned by the subprime meltdown, but which are otherwise sound ... dollar-rich countries seeing opportunities to grab massive amounts of shares on the cheap and willing to wait years for the turnaround.)

Posted 3 years ago #
Rockmastermike
CORNspiracy HQ
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lifeliberty wrote
You can't plant and grow meat silly! :wink:
Chickens!

Posted 3 years ago #
Andrew Hall
Dennison Place (The Circles)
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gramarye wrote
By the numbers I've seen, the subprime crisis took away billions, even hundreds of billions ... not trillions.
The current estimated write-offs alone are approaching $500bill or 1/13 of the total investments. And that is just current write-offs. Where it goes ...
However, the numbers still suggest that, even despite that, foreign investors are still reasonably upbeat about America's fundamentals.
I think the numbers support the conclusion that the subprime meltdown hasn't deterred investment in America--it's just deterred investment in the subprime mortgage market, of course.
What numbers? The article cited 00-07 which is pre-crunch. Other than that, we have a few high profile acquisitions. Some might consider us Filene's. It is too early to make any determination.
Right now, the big money (eg central banks) are massively skittish. We look really good for two reasons - devalued dollar and strong credit history. In both cases, investors are pursuing the safest course in lieu of growth. The really big and interesting question is what this will mean in terms of the US economy and its growth.
I am somewhat upbeat, but the article just didn't back up its conclusions. It was a rah-rah piece.
A.

Posted 3 years ago #
lifeontwowheels
Highland West
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Rockmastermike wrote
lifeliberty wrote
You can't plant and grow meat silly! :wink:
Chickens!
Right on!
I can;t wait to have a house where raising chikens and growing vegetables is possible.

Posted 3 years ago #
Walker
The KLD / Downtown
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Isn't it illegal to raise chickens within Columbus city limits?

Posted 3 years ago #
michaelcoyote
!seabus
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Walker wrote Isn't it illegal to raise chickens within Columbus city limits?
I believe the law is 3 hens.. no roosters.
EDIT: I just checked, I can't find the statute allowing 3 hens, but I did find that if you are farming birds for sale you need 5 acres and must have approved enclosures that sit 100 ft from the road. Nothing on birds for "personal" use or pets.

Posted 3 years ago #
Walker
The KLD / Downtown
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I thought I remembered an article in the news last year about some mexican immigrants getting in trouble for raising chickens within city limits. Perhaps they just had more than three, or had a rooster that was waking people up though.

Posted 3 years ago #