Lilome4, I think I would agree with you. There is an emotional response to this after reading the stories for years of those guys taking home millions annually. But there is such a thing as cutting of your nose to spite your face.

Slammr - I'd be really interested in your thoughts on how this is all going to play out over the next three years. Can you give us a best case and a worst case scenario?

I have some questions about this "3.3% growth" figure.

Namely, is there anywhere to go that we can see a breakdown of this figure by sector? I'd be curious to see what that figure would be, if it didn't include the oil/gas industry. I'm also curious to see how the various sectors are weighted in this figure. Consumer confidence is low, the retail sectors are (as far as I know) almost uniformly down, the housing market is in the crapper, debt is at an all-time high, bankruptcies are growing, and the stock market has been taking some serious blows. Hell, even the auto sector is having hard times. About the only industries I can think of that are doing well are gas and technology. If most every sector if industry is down, except for one or two which are experiencing record growth/profits, does that mean you can ignore all the other signs of economic trouble?

Secondly, does this take into consideration inflation? 3.3% growth sounds... well, ok, but that fails to take into account say a 4% inflation, then technicalities aside you are effectively at -.7%.

Even if this isn't a recession per se (and I'm not willing ton concede that point), at the very least it should be considered a strong warning. Forego spending, do everything you can to reduce (or ideally eliminate) your debt. Find ways to reduce your expenses wherever you can. (Except for donations to the EA, of course.) Do you really need to eat out? Can you live without that new 46" HD TV? And above all else do you really need that $4 Starbucks coffee, or $2 bottle of water? If nothing else, take this warning seriously. We cannot spend our way out of this trouble. More consumer debt will not help the situation.

One last thing to remember is that economists don't have all the answers. Their models are just that, models. It wasn't that long ago that most economists had to reconsider economic theories to account for something new called 'stagflation'. Like most social sciences, economics is still growing and learning. It may well be that we've hit a period not adequately described by current theories and models. And unlike 'hard' sciences, it's hard to pin down economics to set fundamental laws and equations that are capable of independent testing and repeatability. No one has yet worked out the E=mc^2 of economic theory. There's just too much chaos.

Sorry, misunderstood what you meant about the full text....

"The US economy expanded at a stronger-than-first-reported 3.3 per cent annual rate in the second quarter, as consumer spending and net exports were more robust than initially estimated and inventories fell less sharply, a government report showed today.

Gross Domestic Product or GDP for the April-June period was first reported as growing at a 1.9 per cent rate. Analysts polled by Reuters were expecting the annual rate to be revised to 2.7 per cent.

GDP grew at a sluggish 0.9 per cent rate in the first quarter after a 0.2 per cent contraction in the final three months of 2007. The fourth quarter of last year was the weakest since July-September 2001, when the economy was in recession.

Consumer spending, which fuels two-thirds of the US economy, grew at an upwardly revised 1.7 per cent rate rather than the 1.5 per cent pace first reported.

Meanwhile, exports grew at a 13.2 per cent annual rate instead of the 9.2 per cent pace initially estimated.

Many analysts believe that exports and consumer spending, which have

helped the economy skirt recession, are likely to taper off in the second half of the year as spending from government stimulus checks dries up and weakening global growth and a stronger US dollar crimp demand from abroad.

In evidence the severe housing slump continues to weigh on the economy, residential construction was down by an annual 15.7 per cent pace, slightly more than the 15.6 per cent decline reported earlier.

Meanwhile, inventories dipped at an annualised $49.4bn in the quarter, rather than the $62.2bn drop first reported, a possible sign that businesses are less pessimistic than believed."

http://www.independent.co.uk/news/busin ... 11950.html

IE mentioned the issues that we are seeing with debt, and I think that is something that we need to focus on as a significant problem.

Consumer debt levels (among other types of debt, including the national debt) truly are greater now than at any other time in history. Debt payments are making up a significant bulk of Americans' monthly expenses. This removes a lot of disposable income that could be used for a number of more worthy purposes, including purchasing the very items that led them into debt in the first place.

Our American culture is partly to blame. We have become extremely materialistic, and we think we are entitled to whatever we want, whenever we want it. Americans cannot settle. They must have the latest and greatest, the bigger and better. We will do whatever it takes to get it, including borrowing far more than we can afford to pay for it.

Of course, banks have jumped all over these attitudes, and they are partly to blame as well. Credit has been much too easily available for a good part of this decade. Among other things, this easy credit policy created the housing bubble that is the forefront of our current mess. Housing prices were inflated to ridiculous amounts, far more than a piece of land with four walls and a roof should ever be worth. I honestly cannot believe people thought homes were worth what they were charging for them during the peak of the housing bubble. Anyone who bought a home at an inflated price deserves some blame for being willing to pay such prices for a home.

Back in the day, if you wanted you something you couldn't afford, you accepted that you couldn't afford it, and therefore forgot about having it. If you really wanted it that badly, you did something we seemed to have forgotten how to do. You saved for it. You saved cash out of your own hard-earned paycheck until you could afford to buy it with your own cash. You appreciated it a lot more because you knew how long it took you to save for it.

But with today's attitudes, that is all a distant memory. Saving money? Who ever heard of that? No, as Americans we are entitled to what we want when we want it, and we are entitled to use what we perceive as free money to get it now rather than having to wait a while and save for it.

Certainly I am as guilty as anyone else. There are items I have thought I simply must have, and I have used credit and taken on debt in order to have them. Somehow we must find a way to change these attitudes, and unfortunately I am not sure how to go about doing this myself, let alone for the American people as a whole.

Our economy may indeed run on credit, but that doesn't mean it is the right way to run. Perhaps that is part of the problem. Once we learn and apply the values that enabled previous American generations to enjoy those good economic times of our country's peak, I think we will be a lot better off.

I can't speak for anyone but myself but my debt grew out of control for other reasons.

When I was working for the airlines I was doing pretty good managing my income. Then I had a some very good luck when I had about $15,000 come my way from an investment my folks made for me years ago. I was very happy and started to think what I would like to do with the money.

I though about making a down payment on a home or condominium. My plans changed when I thought I had found Mr. Perfect. Mr. Perfect encouraged me to quit the airlines because my flying made him nervous. Besides he wanted me with him all the time. So I quit the airlines. He was the entrepunerial type and so I was helping him out with his business. Turned out a lot of the money went to buy drugs. I knew that on a level but I was blind in love so in my mind it was not as big a deal. I really should have put my foot down but that isn't always easy. Then before I knew it all the money was gone. I really should have known better, but I didn't. All I can say is it was a tough lesson well learned. The next time some one wants money for their business I will tell them to go find some one else to be their venture capitalist, and if they want money to go get high I will tell them to wait and do it with their own profits. Been there done that. Never again.

At this point I was not really in serious debt. I just had one credit card with B of A and that was enough. I wound up getting a job as a lineman at the local general aviation airport in Palo Alto. It didn't pay much but at least I had an income again. One day I received a phone call from my friend at my former airline. He said they were hiring and he thought I had a great chance of getting back in. Being a lineman I didn't have loads of cash laying around so I decided to use my credit card. I bought a used suit, a plane ticket, and made a hotel reservation.

The interview went very well. I was practically in. All I needed to do was pass the physical. Well, unfortunately for me there was a few too many white blood cells in my urine sample. There was a very remote chance that could mean I had cancer. So my application was on hold until I could get this cleared up with my own doctor. The airline said I had 12 days to do this. I rushed home. I had to ask B of A for an advance so I could get home, and see my doctor.

I went to a flight surgeon and he ran the test needed to show that I was perfectly healthy. This was at my expenses of course. The good news is that it turns out I am not dying of cancer! Yeah! The bad news was the airline didn't wait the full 12 days before shit canning my application. More bad news my former employer had filled my position so there was no going back. I was also not eligible for unemployment benefits because I had left my old job voluntarily.

So no job, no unemployment and I owed B of A about $1,500. Still my situation was not that bad, but with no money to pay my bills BofA started tacking on penalties left and right. I let them know what my situation was but they weren't exactly understanding. The penalties increased until they said they were going to sell the loan to a collection agency. I offered to pay the principle of the original amount, but they weren't interested. I guess they figured they could make more selling the loan. So that is what they did. The odd thing is when the collection agency contacted me the principle had magically increased by thousands of dollars. Now I understood why BofA didn't want to settle. OK fine. I offered to settle for the original amount but they were not interested. OK Fine.

Fast forward five years and the loan has been sold several times over, each time the "Original Debt Amount" has been increased by thousands of dollars. I am now being told that the original loan amount was nearly $7,000

Well, I understand they all want to make a profit, and I did make the decisions that led me to my current situation. As far as I am concerned they can sell that loan as many times as they like and tack on as many penalties as they like, but anyone who thinks I am going to pay $7,000 dollars or any other fictitious amount should pull their head out of their as and tack a look at my situation. I don't have the money and my income is too irregular set up a repayment plan.

Now if I should happen to come by a windfall of thousands of dollars...... Well... I'd still be willing to pay off the original amount

lilolme4 (imported) wrote: Tue Sep 16, 2008 8:57 pm We're not in a recession. A recession is two consecutive quarters of the economey shrinking. So far we've not even had one quarter. This last one we actually had 3.3% growth if I remember correctly.

We may not be in a technical recession. As I said, exports have been propping up the economy, but if it looks like a recession, feels like a recession, tastes like a recession, and every one thinks we're in a recession, we either are in a recession or will soon be in one.

IE also had a good point about inflation, which may hit 10% (actual numbers not government massaged numbers). If we have growth of 3.3% and inflation of 10%, I would contend that the economy isn't growing. If you trust the government numbers, I have a bridge I'd like to sell you; it's in Minneapolis, by the way (or was). The increase in the price of gas alone contributes to the growth in the economy, and I doubt that anyone thinks that's a good thing.

Of course, we also had $150 billion pumped into the economy through the tax stimulus refund checks. Now, if they give me another one, I'll use it to pay off some of my debt (the last one went to pay State taxes), but I don't think the government can afford to send any more.

The bank I work for - although they don't say it - thinks we're in a recession. Collecting current debt is stressed rather than obtaining new customers, and anyone that misses a couple of payment in a year on their credit card will likely find it's been closed. Before, they used to bend over backward trying to save accounts. They've almost entirely cut out balance transfers and actively soliciting new credit card customers. Hell, they used to give them to practically anyone.

I have some Washington Mutual credit cards (not my bank) and they're still offering balance transfers, but they also might be the next bank to fail.

We, the consumer, are as guilty as anyone. Hell, I wish I'd never been given credit cards, or at least, I wish I had kept the credit lines low. It's too easy to put something I want on a credit card rather than w

Arab Nights (imported) wrote: Wed Sep 17, 2008 12:26 am aiting until I can actually afford paying cash for it.

Slammr - I'd be really interested in your thoughts on how this is all going to play out over the next three years.

Can you give us a best case and a worst case scenario?

I'll have to give this some thought and will get back to you on this board. Off the top of my head, I think it's going to be bad. We will probably avoid a depression, because the government has tools available they didn't have back in the 1930s. Today, they ease credit and make more money available. Of course, the result of that is Inflation, and that might be the greatest threat in the long run.

The price of oil is down for a couple of reasons: people around the world are using less of it because it became so expensive and because of a - at least perceived - slowdown in the world's economies.

Once the economies are going full blast again, oil is going through the roof, and we can only hope it, at least, pauses at $200/ barrel. It could hit $300/barrel, depending on how the oil companies react to the current reduction in the price of oil. Many of the newly found areas won't make a profit for them at under $100/barrel, and if they can't make a profit, they won't drill (of develop oil sands or shale).

Of course, everyone wants to blame the oil companies - and I'm not saying they're not at fault, too. They share the blame with the rest of us, the consumers and our government. Were any of you putting pressure on your congressmen, the oil companies, or the president, when oil was cheap? I wasn't.

We should have started 30 years ago, when the Arabs imposed the oil embargo on us. That should have been a wake-up call: "Hey, look, America. We've got you by the balls, and you're too stupid to do anything about it."

You know what? They were right.

BossTamsin (imported) wrote: Wed Sep 17, 2008 1:27 am Even if this isn't a recession per se (and I'm not willing ton concede that point), at the very least it should be considered a strong warning. Forego spending, do everything you can to reduce (or ideally eliminate) your debt. Find ways to reduce your expenses wherever you can. (Except for donations to the EA, of course.) Do you really need to eat out? Can you live without that new 46" HD TV? And above all else do you really need that $4 Starbucks coffee, or $2 bottle of water? If nothing else, take this warning seriously. We cannot spend our way out of this trouble. More consumer debt will not help the situation.

For each of us personally, I agree 100% with IE. That's the only way to protect ourselves. We all need to become fiscally responsible - as individuals and as a government.

Unfortunately, that will put us in a recession, but the alternative, in my opinion, is much worse: no currency that is worth shit. I can't think of any currency in the world - right now - that is not at risk.

My nephew is an economist who works with a bank that does a lot of business with American International Group. I am amazed by how these companies are failing.

I suppose that these companies have become quite diverse and involved in many kinds and forms of business. I wonder how much any one person understands even how these companies work.

I think there are strong points even in some of the companies that have failed or are about to fail. The entire world is realizing that they are still linked to us. We sneeze and they get our cold.

I agree that we don't want to over regulate but we have to realize that regulation of markets is a function of government. We do have to develop a more diverse energy policy. I don’t know exactly what the best mix is or the best kinds of structures to develop, but I have begun to have more respect for some forms of control outside pure market forces, but lets not overdo it.

.

Hear! Hear!