US and world economy

[Alan_L_Texas]

CNN - Communist News Network

[EJB]

Good post clint...I think you are right in that there are an awful lot of "soft" people out there whom assume that the govt will bail them out of just about any trouble they get into....which is exactly why I fear that if some truly bad happens (i.e. a huge terrorist attack, or multiple prolonged attacks, an extended period of deflation/depression/unemployment)...and the govt is unable to "bail" people out, that things could get really ugly really fast.

You are also right on about financial education...in particular, my concern lately has been debt. The more I read about it (the debt burden carried by govt, companies and individuals) the more it is making me very nervious about what the future holds.

So many people and companies are so upto their eyeballs in debt that if the economy does not pickup dramatically soon, the debt will become unmanageable (more unmanageable than it already is).

Our own govt (federal) now owes $6.4TRILLION dollars. Just to make the payments on that debt the govt needs to raise and spend over $300BILLION a year(and thats with low interest rates)...at the current spending and growth rates I can easily see that $6.4Trillion becoming $10Trillion in short order if the proposed stimulus package does not work as intended (i.e. the tax rate goes down but it fails to increase revenue as predicted). I hope it will, but I have doubts. It really doesn't matter how much additional revenues the govt raises if it continues to spend more than it brings in.


I still find it hard to beleive that what we have done as a nation is spend over $6.4Trillion dollars of our childrens and grandchildrens money to support current consumption..i.e. even with all the money that govt takes from us in the form of taxes, we as a nation have demanded and supported even more spending than that in order to "have now" what we couldn't afford or weren't willing to pay for.

It is exactly the same for many individual families: running up their credit cards and spending what equity they had in the their homes(cash out refi's) in order to increase their lifestyles with "must have" luxuries that they can't really afford.

I just don't know where we go from here with the govt getting closed to maxed out on debt, and many individuals having maxed their credit cards and drained most/all of the equities from their houses...no doubt this extra spending has supported the economy thus far,,,but what happens when it can no longer be sustained? We may be sitting on a 3 legged stoll and one leg is getting pretty wobbly.

This really is the type of conversation I was hoping to spur here when I started the thread...these are my fears (not so much a prediction) and I'd really love to have someone tell me why I am wrong ...what will pull the country out of this hole we are in? What is on the horizon that I can't see?

I agree completely Clint and EJB. Perfect example is my insurance. Like most of you our insurance has tripled or better. I took some insurance off and decreased the benefits of others. My insurance got had a fit. Well what happens if this and this happen. I told him I'll just have to take care of it.

Too many people wnat everything guaranteed but that is just not life.

[EJB]

Insurance is a big killer for a lot of people, and is getting worse. For those that don't realize most insurance comapnies have kept there policies low for years because all those premiums you've been paying they were able to invest in the market and make really big gains (this is how warren buffet got rich), and use the investment proceeds to pay-off claims. Well now after 3 down years in the market most insurance companies are loosing money on their investments, or at a minimum, not making nearly as much so policy holders need to make up the difference. (and pay for all those fancy office buildings too [img]/forums/images/icons/smile.gif[/img] )

Many are blaming Sept 11th, but that is really just a small part of the problem...its the market returns that they are *not* getting anymore that is causing most rates to go up.

I too have trimmed back on my insurance, cancelled some (got rid of tractor insurance for one), and raised deductibles on my autos, and lastly am considering cancelling our health insurance altogether, (after the 4th is born in April/May.)

I don't get insurance thru work (self-employed), so I pay close to $10,000 per year for Blue Cross policy...and its due to rise by 14% this year and probably at least that next year.

I do think medical insurance, in particular, is going to be a huge problem...as more people like me drop off the roles because they either can't afford it, or feel like they want to gamble (like I do) that we won't need more than $10K per year in services), the more expesive it gets for other people, so the more people drop off....its a vicious cycle....since you are an MD, I assume you are even more aware of the growing problem than I am.

I have heard of some people having huge increases in home-owners insurance too in various parts of the country., but so far I have been spared that apin; but we'll see at the next renewal.

I really think the huge market bubble and subsequent burst (which imo, still has a way to go) is going to ripple thru the economy for many years to come, and manifest itself in ways no one fully realizes yet...i.e. the increase dependencies on SS since many 401K are wiped out, higher insurance costs, huge state and local tax increases and huge cuts in services to make-up for the loss of capital gains tax revenue etc.

Enough gloom and doom for now. [img]/forums/images/icons/tongue.gif[/img]

[jasonf]

We are in a tough spot, and we did not get here overnight. This economy is the result of years of allowing global trade agreements with countries who do not buy our products, and make our goods cheaper than we can! This country is turning into one big service economy. Where are all the manufacturing jobs? How about in Mexico (thanks NAFTA).

It is time we started doing what is best for us and not worrying about establishing economys in South America, and Asia. Why is it that widgets made in Korea, shipped across the ocean in container ships, is still cheaper than we could make them here? Maybe because they have no enviromental laws and pay people a fraction of our labor wage!

Sorry about the tone, but I truly believe that issues like these are what turn a temporary downturn into a strucural economic diadvantage that is going to cripple us and generations that follow [img]/forums/images/icons/shocked.gif[/img]

[fivestring]

Why is it that widgets made in Korea, shipped across the ocean in container ships, is still cheaper than we could make them here? Maybe because they have no enviromental laws and pay people a fraction of our labor wage!
One word --- union.
Ask the airline, automotive, textile industries, etc. about unions. $30 an hour to stand in a hangar and actually work 4 of the 8 hours. I know because I play music with quite a few of the union airline workers. They have lots of spare time "on the clock". Now the cutbacks from 85,000 to 65,000 is killing them. WAAAAAAAAAHHHHHHH !
Anyway, wingnut, Ranchman, Alan L Texas, cowboydoc, Hayseed, Clint and Jason f.... love you guys....great insight on the media and government. Let's do lunch sometime !!!!

[wingnut]

hmmmm, fivestring, you been reading my mind?

I just love the attitude of many folks on why the economy sucks .... my latest "hmm, that's interesting" observation was yesterday - on education. All the colleges and universities are raising their tuition to the point where the average student is going to be having real problems (as if they already aren't) ... but I've seen NO SIGNS WHATSOEVER of using the money for infrastructure that might lead to a good education. (All the students that were interviewed and professing dismay were taking liberal arts, political science and the like ... NO hard sciences!) I've seen (quite a few) studies showing that the states with the highest expenditure per student have the lowest SAT scores .... but, for some reason, the teachers union resists testing, evaluating, and performance-tied salaries. But they sure do believe in work action for higher wages.

I guess the real question is - where do YOU shop and what do YOU value? Do you go to "Safeway" (or wherever) and buy the stuff that's on sale ... or do you go to the Farmer's Market and pay 2x, 3x, 4x the price to reward the local guy? Do you look for the Made In America label before you put it in your cart? Do you only buy the beer with the "Union Made" label?
Myself ... I'd have to say the answer is NO .... I buy what's on sale, I buy things based on the perceived value and life expectancy I'm interested in.

I definitely don't look for Made In America labels - not because I don't support American workers (I are one LOL) ... but because I wouldn't want someone in Australia or Japan or Canada looking for non Made in the USA labels. It's a global economy and they can't afford to buy our stuff if they don't sell thier stuff.

We've had a few threads in the past about unions and their impact ... I find it very interesting that the majority of union workers now are non-manufacturing. Now, I could very well be wrong - it happens - but that seems to me to be a direct result of pricing themselves right out of the market. The steel industry, among a great many others, is just about history. The Big Three are already "global" instead of American.
Why? .... well, our wage rates are EXTREMELY high compared to other countries that make the same quality of product. Yeah ... they pay the workers less ... but they still have to pay a living wage .... they just don't have to pay them enough to have a TV in every room, gold plated toilets, a motorhome that costs more than their house, etc.
I work in the Saginaw area where there is a great deal of industry revolving around automotive ... and I'm one of the few in the local Gold Wing chapter that isn't union. We've got this huge concentration of assembly line workers who have a huge amount of disposable income .... and, folks, that's one reason that a car costs you more than HOUSES used to cost. (Most of the over '50's are already retired with pretty impressive pensions.)
And before we jump on corporate profits (which sure seem to be pretty slim these days) ... make sure that you remember that almost all of these are public companies that are supposed to return profits to their owners - shareholders like you and I and the pension funds - or fold up and blow away.

Anyway ... is the economy as bad as the media is painting it? Hmm ... even with Enron, WorlCom and the other "disasters", I haven't seen TOO MANY folks jumping out of the windows .... no mass exodus from Oklahoma to California, the railroad yards aren't filled with hobos. The unemployment numbers don't seem to be significantly higher than the days when the aerospace industry cut back .... so, I'd have to say .... "The Sky is Falling, The Sky is Falling".

Of course, my step-brother ... who isn't selling any beef because he's a rancher in Alberta and no beef is crossing the border ... might not agree with me ... [img]/forums/images/icons/confused.gif[/img]

pete

[fivestring]

I think I have been reading your mind and a whole lotta other folks minds, also!
They can throw all the $$$$ in the world at schools but it ain't gonna help. US Air is a prime example of how a union shouldn't be.... 6th largest airline -- 1st highest in labor costs. Now they're crying that they have to take pay cuts. Their union has them so brainwashed they think that they should make more of the profits and management less. I say go find a real job. Go move to Russia or other countries where everyone makes the same wage has has the same things -- nothing! That's socialism, not democracy. A democracy allows a person to own a business and make as much money as he can. That person does not have to share ANY profits other than taxes and other costs associated with doing business.
One of the things our country should do is stop sending $$$$ to other countries that do not help us. Can you say France, Germany, Russia, and about a hundred other countries???

[Roark]

http://www.democraticunderground.com...5288&page=

Looks like someone was getting beat and needed help.

PS - Calling your opponents "inbred" is pretty much an admission of defeat.

[fivestring]

"(All the students that were interviewed and professing dismay were taking liberal arts, political science and the like ... NO hard sciences!)" [img]/forums/images/icons/shocked.gif[/img]

Then, when they can't find a job dancing, acting, hugging trees, they come in flocks and apply at police departments wanting to be cops!!!! [img]/forums/images/icons/blush.gif[/img] They apply at the post office and other places because liberal arts is a "no future" degree. [img]/forums/images/icons/frown.gif[/img]

Standing joke in NC is "what does a Carolina graduate say to a NC State graduate?"
"Welcome to McDonalds!" [img]/forums/images/icons/grin.gif[/img]