How bad is the economy? - Page 11 - PeachParts Mercedes-Benz Forum

#**151** 07-25-2010, 12:02 PM

Don't forget that china is also holding a huge amount of stock in "US companies." Also, the value of the dollar is based, in large part, on the fact the the US doesn't default. In practice, the Chinese/American economy is a single economy; they will be linked together for the forseeable future.

pj67coll · #**152** 07-25-2010, 12:10 PM

Quote:

Originally Posted by Craig

Don't forget that china is also holding a huge amount of stock in "US companies." Also, the value of the dollar is based, in large part, on the fact the the US doesn't default. In practice, the Chinese/American economy is a single economy; they will be linked together for the forseeable future.

Chimerica.

- Peter.

#**153** 07-25-2010, 12:13 PM

Quote:

Originally Posted by pj67coll

Chimerica.

- Peter.

Yup, that's pretty much the reality.

Pavka007 · #**154** 07-25-2010, 01:11 PM

Quote:

Originally Posted by pj67coll

Chimerica.

- Peter.

Now that is funny...painful but funny

retmil46 · #**155** 07-25-2010, 01:54 PM

What of the new financial regulation bill?

Other than Moody and S&P now being held liable for their ratings, such that they've issued the disclaimer telling everyone from now on to disregard their ratings, here's what has been related to me second hand (working 10 hr days 6 days/wk makes it hard to keep up on news) -

The bill essentially does nothing to regulate derivatives trading, which played a sizeable part in getting us into the current mess, until 2022. So players like Goldman Sachs are free to go on as before trading "toxic assets".

The Fed has been granted increased powers to take over financial institutions they deem to be at risk of failing and/or "a risk to the stability of the financial system". From what I've seen of the Fed over the years, this sounds like a situation ripe with the potential for abuse and outright robbery - you either kiss a$$ and play ball with the Fed, or one day they might connive a situation to declare your institution "insolvent" and seize it's assets for their purposes, no matter how healthy your institution actually is.

glenlloyd · #**156** 07-25-2010, 02:04 PM

I think we're finally reaching a point where the non-recovery can no longer be denied. This past week many of the economic indicators were negative and the ECRI moved to -10.5 which in the past (99% of the time) indicates recession. Whether the NBER considers this a new recession or just a continuation of the prior remains to be seen. Without govt. spending (that we all ultimately pay for anyway) there would have been little growth. Recent calculations suggest that for every dollar of govt. spending we're now getting a -.40 cent gain (drag)....this isn't good.

I expect July unemployment could be a tipping point where the markets recognize the reality of a very maladjusted US economy.

Austerity is coming, we know this. I thoroughly expect a VAT within a year. We cannot tax enough to even begin thinking about reducing the deficit. It's a short hop from the new 1099 rules hidden in the health care bill to a full VAT.

For over three decades we have been living off nothing but credit expansion and that my friends has come to an end. If the consumer doesn't (or as I believe can't) spend or borrow to consume we will continue to contract. There's nothing to drive employment up at this point.

The key to surviving the future will be to have a very thin economic profile, as little debt as possible and no questions about servicing that debt, even if unemployed. People with broad economic profiles will be the most vulnerable to and most likely to fall. Having cash right now is a good thing.

I think the second half of the year will be bad, and a couple of the analysts I read suggest liquidating assets to cash before the end of the year if possible. In so far as I can I've been doing that, but be aware that the value of the dollar is also an issue too.

my .02

steve a

raymr · #**157** 07-25-2010, 02:25 PM

Quote:

Originally Posted by glenlloyd

I think we're finally reaching a point where the non-recovery can no longer be denied. This past week many of the economic indicators were negative and the ECRI moved to -10.5 which in the past (99% of the time) indicates recession. Whether the NBER considers this a new recession or just a continuation of the prior remains to be seen. Without govt. spending (that we all ultimately pay for anyway) there would have been little growth. Recent calculations suggest that for every dollar of govt. spending we're now getting a -.40 cent gain (drag)....this isn't good.

I expect July unemployment could be a tipping point where the markets recognize the reality of a very maladjusted US economy.

Austerity is coming, we know this. I thoroughly expect a VAT within a year. We cannot tax enough to even begin thinking about reducing the deficit. It's a short hop from the new 1099 rules hidden in the health care bill to a full VAT.

For over three decades we have been living off nothing but credit expansion and that my friends has come to an end. If the consumer doesn't (or as I believe can't) spend or borrow to consume we will continue to contract. There's nothing to drive employment up at this point.

The key to surviving the future will be to have a very thin economic profile, as little debt as possible and no questions about servicing that debt, even if unemployed. People with broad economic profiles will be the most vulnerable to and most likely to fall. Having cash right now is a good thing.

I think the second half of the year will be bad, and a couple of the analysts I read suggest liquidating assets to cash before the end of the year if possible. In so far as I can I've been doing that, but be aware that the value of the dollar is also an issue too.

my .02

steve a

I can handle a VAT if, and ONLY IF, they abolish the income tax. Fat chance of that huh?
Letting the gov have a new revenue stream like that will only invite more fiscal irresponsibility. How about a balanced budget amendment first?

Your observations are interesting, but they don't quite mesh with the latest earnings reports from companies like Microsoft, Ford, Caterpillar, and the big banks.

#**158** 07-25-2010, 02:33 PM

I don't see the US changing it's tax structure anytime soon. My guess is that we are somewhere near the bottom, but we won't really know until we see some actual signs of recovery. No need to panic, it's just another cycle.

kknudson · #**159** 07-25-2010, 04:46 PM

Quote:

Originally Posted by raymr

I can handle a VAT if, and ONLY IF, they abolish the income tax. Fat chance of that huh?
Letting the gov have a new revenue stream like that will only invite more fiscal irresponsibility. How about a balanced budget amendment first?

Your observations are interesting, but they don't quite mesh with the latest earnings reports from companies like Microsoft, Ford, Caterpillar, and the big banks.

Give they Polis more money, they will spend it on new things.

Balanced Budget amendment. Don't they have one of those already, if not most states do and they balamce their budgets

They've tried paygo repeatedly.

They also have a debt limt, which each year they just vote to raise, so it's a waste of energy.

So unless you replace our politicians with people, there just isn't a lot we can do. well ......

Skid Row Joe · #**160** 07-25-2010, 05:06 PM

Quote:

Originally Posted by raymr

If the bank lends you $100K, you own nothing.
If the bank lends you $100Billion, you own the bank.

So if the US defaults, bye-bye China.

Walk into a Chase Bank, sit down with one of their agents and ask for a loan, and the interest rate on a $30K loan, with a fully-secured CD with them for that amount.

Not only can they not quote an interest rate to you, they will take down your contact info. in order that someone from their divisional office call you in a day or two... When the agent returns your call, unless they talk with you in person, they will not leave you the interest rate info. you requested.