The Impending Global Recession?

vbimport

#1

America in freefall …

OH GOD! PULL YOUR MONEY OUT OF THE BANKS & STUFF IT IN YOUR MATTRESSES!!!
J/k … Seriously, don’t do that. It’d screw the whole world very quickly :iagree:

According to two argumentative economists on TV … one for, one against the government bailout of US banks, which has been temporarily (and probably permanently) canned anyway, the USA produces approx 25% of the worlds goods, but consumes approx 60% of the worlds goods.

Since the money in the USA has run out, what are the effects on the rest of the world?

The way I see it is that there will be a temporary world recession, lets say 12 months, as the majority of production will come to a virtual standstill as the majority of producers aren’t going to know where to send their products and they’ll be stockpiling for a few months before scaling back production … until they find new customers/endpoints for the goods they’ve stockpiled, and of course to send their future production capacity.

The USA will find their influence in the world economy virtually stripped, as their consumption drops back to significantly less than they are producing - this will be a huge drop in the Quality Of Life that the people in the USA enjoy atm (Sorry Guys) - admittedly, much of this is wasted rather than used, so probably not too much difference in QOL.

But keeping in mind that the Worldwide resources, transport systems, production facilities and human resources are already in place (and hopefully paid for in advance, rather than by US financed credit :wink: ), it’s just a matter of finding new markets, or more likely (and initially), expanding existing markets.

These markets will likely be China, India, Africa(?) & East Europe, but also likely the QOL of other non-USA parts of Western Society will also see a significant (but temporary) influx of wealth (or at least a huge excess of products, which makes everything cheaper), freed up by the US recession. Basically, the recession in the USA will cause some temporary setbacks, but will provide then provide a huge boom to the rest of the world … which will eventually stabilise, and then the worlds economies will slowly start to climb as they usually do.

Since the whole world economy is circling the drain, maybe it’s a good time to implement sustainable environmental accounting, eh?
If it’s implemented, it may impede the economy initially, but then how would we really know? :wink:

Opinions?

So anyway, I guess, the question is:
How do you think the US recession will affect you and your country, over the next 12 months, and over the next 60months (5 years), and the long term?


#2

As long as the government doesn’t hinder the free market the USA will come out of this fine. I think we are coming to the point of having to address the our addiction to spending. Especially the government’s addiction to spending. I think the economic pain is necessary to right the ship and from what I saw with the public’s rejection of this Wall Street/bank $700B bailout bill many others feel the same. Another reality is I, and most other people, don’t trust the government to tell us the truth or to even know the solutions to our problems. This country works better when free market principles are allowed to operate. The genesis of this whole banking/mortgage mess was when the government started forcing banks to make loans to low income borrowers that couldn’t afford the houses they were buying. Then to compensate for this they concocted these subprime short term mortgages that relied on increased house prices when these loans came due to justified refinancing their debt. Well, that didn’t happen so now the market needs to be allowed to readjust and not be artificially pumped up with tax dollars.

The USA has been claimed to be on the ropes time and time again. Most of this doom and gloom is propagated for political reasons. It is an election year, you know and guess who benefits. Look at what the value of the dollar is doing right now. It is jumping up by leaps and bounds. Why is that? It is because many foreign investors see the USA as being the best positioned to come out of this financial mess first and the strongest. The only thing that will mess up the recovery, IMO, is the government gumming up the free market system by nationalizing these bad mortgages. The government needs to get its own house in order first by reigning in spending and lowering taxes to spur economic growth. If anyone wants to know the real reason manufacturing jobs are leaving this country it is the fact the USA has the highest business tax rates IN THE WORLD!!! It doesn’t take a rocket scientist to figure out that moving manufacturing to countries that have less taxes and regulation makes good business sense and the lower labor costs are just icing on the cake.

Lastly, these developing countries like China, India etc. are going to hit major problems as they develop further. If you look at the developed countries that protect their markets through tariffs etc. you will find they have huge growth problems. France, Japan, Germany etc. are a few that come to mind. The strongest plus the USA has going for it is the free market system. The government needs to stop strangling it and we will come out of this just fine. One other major plus from this downturn is the price of oil is going to drop like a rock. This single occurrence might have more positive impact on fueling a recovery (pun intended) than anything else that can be done.


#3

Some people are too free. Imagine a world where 3 billion consumers in China and India will “waste” just as much per capita natural resources as the present 0.3 billion consumers in the United States of America do. And there will be another 3 billion or so in Africa, Latin Americas, and smaller Asian countries. Average life quality of those 6 billion future humans will be much better and higher than that of present Westerners but not necessarily destroying so much. Long-term efforts should be concentrated on how to make an equal and prosperous world without letting anyone waste that much as most of the Westerners do now.


#4

[QUOTE=Kenshin;2136248]Long-term efforts should be concentrated on how to make an equal and prosperous world without letting anyone waste that much as most of the Westerners do now.[/QUOTE]
I think so, too. Until recently, the U.S. has been catered to because it was the largest easily-accessed market for pretty much every good or service. Now other markets have opened up, and the U.S. hasn’t adjusted to being just one of the guys yet. Our manufacturing capabilities have atrophied, and our production costs have risen… but we’re still spending wastefully at home and pouring resources into being a global nuisance. It seems to me the only thing we’ve been exporting lately is democracy.


#5

The United States does not have the highest taxes on business this is just not true. The government group that looks at this just stated that over 90 percent do not pay any taxes. Also that if you figure in GDP our business tax rate is second from the lowest.

nearly two-thirds of companies operating in America reported owing no taxes from 1996 through 2000? That over 90 percent of large corporations – with at least $250 million in assets or $50 million in gross receipts – reported owing taxes of only 5 percent or less?

They would but all those loopholes that both parties pass keep them from paying taxes.

You are right about one thing if we would stop spending more money that we have we would fix a lot of our problems . Money like the War and foreign aid to start with. I for one would never go to a bank and borrow on a credit card money to give to my church, so why does our government borrow money from China so we can give it to countries overseas?


#6

[QUOTE=UTR;2134601]As long as the government doesn’t hinder the free market the USA will come out of this fine.[/QUOTE]

Once the government interferes with the “Free Market” system it no longer is a free market system. It becomes a government run system. It has basically been a government run system for decades. The government decides which company or industry fails. If they don’t want a company(automobile) or industry(financial) to fail, they force the tax payer to bail it out.

[QUOTE=UTR;2134601]If anyone wants to know the real reason manufacturing jobs are leaving this country it is the fact the USA has the highest business tax rates IN THE WORLD!!! It doesn’t take a rocket scientist to figure out that moving manufacturing to countries that have less taxes and regulation makes good business sense and the lower labor costs are just icing on the cake.[/QUOTE]

Businesses don’t pay taxes, people pay taxes. If the government taxes a business, they just pass the tax on to the consumer(higher prices). Manufacturing is leaving the USA only for cheap labor. They don’t have to pay unemployment insurance, health care, retirement benefits, and wages are a fraction of what they are in the US. The price of the product is the same but the profit is greater.


#7

[QUOTE=Pernundel;2136309]Once the government interferes with the “Free Market” system it no longer is a free market system. It becomes a government run system. It has basically been a government run system for decades. The government decides which company or industry fails. If they don’t want a company(automobile) or industry(financial) to fail, they force the tax payer to bail it out.[/QUOTE]

Some government intervention is required in a capitalist system. IMO, the first role of government in a free market system is to promote competition. Monopolies are kryptonite to free markets. Government should also look to protect consumers through regulation for things such as safety, truth in advertising etc. IT is simply not possible to have a truly free market in the theoretical sense. I do agree that our government here in the USA has gone overboard with strapping down businesses and it is running much of our manufacturing base overseas.

[QUOTE=Pernundel;2136309]Businesses don’t pay taxes, people pay taxes. If the government taxes a business, they just pass the tax on to the consumer(higher prices). Manufacturing is leaving the USA only for cheap labor. They don’t have to pay unemployment insurance, health care, retirement benefits, and wages are a fraction of what they are in the US. The price of the product is the same but the profit is greater.[/QUOTE]

Corporations do pay taxes. Corporations exist so a business can be interacted with, and operated, like a single entity or person legally even though ownership is through multiple people. Some manufacturing is going to leave based on evolution of our economy. The same people that complain about their jobs leaving are the same ones going to Wal-Mart and buying products made in China because they don’t want, or can’t afford, to pay more for those same goods made here. On the other hand, there are other manufacturing like hi-tech products that could stay here if business taxes were lower and regulations more friendly. Also, the USA simply doesn’t have the work force to manufacture all the items we consume and provide all the services we want or need. This is why illegal immigrants are here by the millions.

The fact is that Americans need to morph themselves into what is needed in our workforce for today and in the future. Current unemployment is at 6% and there are plenty of unfilled jobs that require specific skills so the lack of jobs isn’t the issue. The issue is the lack of qualified people to fill the jobs we have now and the ones coming online in the future. Hi-tech companies are going to extremes to bring educated people into the country to fill hundreds of thousands, if not millions, of open jobs. They are going to be in dire straights soon.

The real travesty, IMO, is the dumbing down of Americans. We have made engineers out to be nerds and slackers out to be “cool”. If we follow this path for a few more decades we will be well on our way to being a third world country because China, India etc. are churning out engineers and scientists at ferocious rates and many of them are getting educated right here in our colleges. When I look around at the younger people today I see way too many that are lethargic, under educated and lack basic common sense. I’m not painting ALL young people with this brush but there are way too many, IMO, and this is going to have a big impact on our future role in the world. Much more than many of the other things we are wringing our hands over. Our educational system in the USA for grades K-12 is horrendous and is producing way too many graduates that are completely unprepared to live and work in the real world.


#8

[QUOTE=samlar;2136261]The United States does not have the highest taxes on business this is just not true. The government group that looks at this just stated that over 90 percent do not pay any taxes. Also that if you figure in GDP our business tax rate is second from the lowest.

nearly two-thirds of companies operating in America reported owing no taxes from 1996 through 2000? That over 90 percent of large corporations – with at least $250 million in assets or $50 million in gross receipts – reported owing taxes of only 5 percent or less?

They would but all those loopholes that both parties pass keep them from paying taxes.

You are right about one thing if we would stop spending more money that we have we would fix a lot of our problems . Money like the War and foreign aid to start with. I for one would never go to a bank and borrow on a credit card money to give to my church, so why does our government borrow money from China so we can give it to countries overseas?[/QUOTE]

Businesses are in business to make profits. All these loop holes aren’t designed to increase profits but to encourage less profits. This is forcing too many companies to relocate much of their operations overseas. I am amazed that our elected leaders are too stupid to understand this dynamic. It is economics 101. We ARE at the upper tier of countries for taxing business PROFITS. This is a HUGE reason why manufacturing is leaving the country. Not the only reason but one of the major ones.


#9

My personal feeling is that this is a repeat of The Great Depression, and based on the stock market’s collapse the last few days it’s going to get very ugly…



#10

I look at the ability of the stock market to go up about as fast as it can go down. When the bottom is reached there will a rush to buy, IMO. All this stuff the governments are doing isn’t going to change market dynamics. The losers will lose and the winners will win. We are now figuring out who has won and who has lost. It may take more time before the final tallies are made.

I am in the land development business and things have been UGLY for a long time. The housing market was ignored for YEARS and now it is coming back to bite EVERYONE in the a$$. We can thank the government for pushing lenders to make loans to people that couldn’t afford them by giving subprime loans and relying on ever increasing house values to allow for refinancing in the future. Well we all know home values can’t appreciate year after year and especially at 15%-20% annual rates. Now with home values falling the equity isn’t there to support refinancing or to back many of the home equity loans made in the past 5-6 years. Until housing prices stabilize and start increasing this mess will continue. I’m not sure this will trickle into the larger economy as the home building industry is already decimated and this effect has already hit.

If we are lucky we will see a period of no growth or a slight decline in GDP. One positive thing out of all this is lowering energy prices and the dollar is strengthening. Even with all our problems the USA still appears to be the best place to park your capital when looking at the problems of the rest of the world. We are much closer to coming out of this mess than most other countries.


#11

[QUOTE=UTR;2138943]I look at the ability of the stock market to go up about as fast as it can go down. When the bottom is reached there will a rush to buy, IMO. All this stuff the governments are doing isn’t going to change market dynamics. The losers will lose and the winners will win. We are now figuring out who has won and who has lost. It may take more time before the final tallies are made.[/QUOTE]The groundwork has already been laid for a prolonged down cycle…The real credit crisis hasn’t even reared it’s ugly head…I’m shorting sectors via Proshares ETF’s and doing pretty well…I haven’t seen any reason to go long, and probably won’t in the foreseeable future…

[QUOTE=UTR;2138943]I am in the land development business and things have been UGLY for a long time. The housing market was ignored for YEARS and now it is coming back to bite EVERYONE in the a$$. We can thank the government for pushing lenders to make loans to people that couldn’t afford them by giving subprime loans and relying on ever increasing house values to allow for refinancing in the future. Well we all know home values can’t appreciate year after year and especially at 15%-20% annual rates. Now with home values falling the equity isn’t there to support refinancing or to back many of the home equity loans made in the past 5-6 years. Until housing prices stabilize and start increasing this mess will continue.[/QUOTE]
Allowing off the books exotic financial instruments didn’t help this situation any…When people started using their “equity” as a means to buy toys it just exacerbated the problem…Pure stupidity and greed caused this problem and nothing has changed and won’t until some real pain is involved…


#12

[QUOTE=pipemanid;2138947]Allowing off the books exotic financial instruments didn’t help this situation any…When people started using their “equity” as a means to buy toys it just exacerbated the problem…Pure stupidity and greed caused this problem and nothing has changed and won’t until some real pain is involved…[/QUOTE]

The subprime lending debacle caused a feedback loop that increased housing demand which in turn increased housing values. These lenders didn’t bother to differentiate between investors and those buying a house for personal use. BTW, this was ILLEGAL and people in high management positions should go to jail for their negligence. In the Washington, DC area investors got to the point of being responsible for 25% of all home purchases. Had lenders just done this one simple thing the problem would have been much less severe since the down payment requirements for investors is much greater and this would have throttled back demand and therefore prices. The root of ALL the problems we are facing is due to a large drop in home values. Especially any home purchased in the last five years.


#13

GUY’S
Unfortunetly both pernundel and UTR are right.
once the government takes control it is no
longer a free market. The government has to
have a role like having the F. D.I.C. Insurance
protections for banks. However when they take
over the banks that’s more like socialism.
ZAP.:bigsmile::doh:



#14

[QUOTE=tropic;2136251]I think so, too. Until recently, the U.S. has been catered to because it was the largest easily-accessed market for pretty much every good or service. Now other markets have opened up, and the U.S. hasn’t adjusted to being just one of the guys yet. Our manufacturing capabilities have atrophied, and our production costs have risen… but we’re still spending wastefully at home and pouring resources into being a global nuisance. It seems to me the only thing we’ve been exporting lately is democracy.[/QUOTE]

http://www.ft.com/cms/s/0/407c7b56-952f-11dd-aedd-000077b07658.html?nclick_check=1


#15

[QUOTE=zap em;2139080]However when they take
over the banks that’s more like socialism.
ZAP.:bigsmile::doh:[/QUOTE]
But seriously … who cares. Democracy is a luxury commodity which has no real part in Corporations Capitalism :stuck_out_tongue:

As far as I can tell the primary export of the USA lately has been poor financial judgement & gross Capitalism - I’m not sure which has the the higher priority.

Democracy is something the government protects, but corporations are pushing towards a feudal system and eroding your rights, and the people in the USA are so scared that they’re going to turn into a socialist, or worse communist, regime that they’re actively impeding the governments protection policies, and letting corporations turn you into slaves.

Congratulations :iagree:

Throw in a bunch of religious zealots who are also taking over the government, and you guys are seriously screwed.

USA -> produces 25% of the worlds goods -> consumes 60% and haiti is paying $100au for a cup of rice … wtf?
It’s time to go on a diet.


#16

[QUOTE=debro;2139103]But seriously … who cares. Democracy is a luxury commodity which has no real part in Corporations Capitalism :stuck_out_tongue:

As far as I can tell the primary export of the USA lately has been poor financial judgement & gross Capitalism - I’m not sure which has the the higher priority.

Democracy is something the government protects, but corporations are pushing towards a feudal system and eroding your rights, and the people in the USA are so scared that they’re going to turn into a socialist, or worse communist, regime that they’re actively impeding the governments protection policies, and letting corporations turn you into slaves.

Congratulations :iagree:

Throw in a bunch of religious zealots who are also taking over the government, and you guys are seriously screwed.

USA -> produces 25% of the worlds goods -> consumes 60% and haiti is paying $100au for a cup of rice … wtf?
It’s time to go on a diet.[/QUOTE]

You view isn’t close to reality, IMHO, of course. I would expand on why I think you are wrong but I have work to do this morning. Maybe I can get into it later.


#17

New American Dollar`s :wink:
:bigsmile:



#18

diane7,

Actually, the dollar’s value has been climbing fast against other currencies during this mess. If you want to bash Bush then another angle may be more applicable. :wink:


#19

[quote=UTR;2139299]diane7,

Actually, the dollar’s value has been climbing fast against other currencies during this mess. If you want to bash Bush then another angle may be more applicable. ;)[/quote]

Happy fore your Dollar,
No Basher of any Body
What you got is Better than RSA at the Moment:bigsmile:

PS id rather have 2 Bushes than 1 Zuma :wink:


#20

DIANE7
Yes but, don’t forget our saviors plan. The value
will go up a little bit.
ZAP.:bigsmile::sad: