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Opinions on the economy please....

Discussion in 'Other Hot Topics' started by Heather(CA), Jun 27, 2010.

  1. Heather(CA)

    Heather(CA) Approved members

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    At the risk of sounding like an idiot...What exactly do you think caused this horrible economy? Where so many people have been laid off and almost everyone has been affected.

    I'm thinking it has a lot to do with mortgage companies giving out home loans first to people who weren't ready to be homeowners, and second starting them off with a low interest rate that goes way up later. Am I right? What else is going on? I am just so mad at the effect this has had. I only have 8 years until my house is paid off. But, with my business being affected by other peoples bad credit and the precarious job situation for hubby. We want to get rid of the debt we have while our credit still allows it:(

    I want to know who to blame for what happened in the economy:mad:

    Thoughts????
     
  2. Lisa P.

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    Oh, my, do you want some sauce for that can of worms?

    "Comforts that were rare among our forefathers are now multiplied in factories and handed out wholesale; and indeed, nobody nowadays, so long as he is content to go without air, space, quiet, decency and good manners, need be without anything whatever that he wants; or at least a reasonably cheap imitation of it." - Commonwealth, 1933

    Our economy has been driven by consumerism, rather than production, for over 20 years. We've turned the bulk of our economy over to corporations and government entities instead of letting it be driven by small businesses, individuals, and families. We've been given "wake up calls" over and over again, we get worried and anxious and then when things get better again we forget all about them.

    You know I'm a right wing looney. After 9/11, I thought that was a good time for us to reconsider our place in the world, what choices we were making as a nation, what we wanted our future to look like. Instead, the president came out and told us we needed to buy more stuff if we didn't want the terrorists to win. He should have told us we need to get back to our roots, our values, our standards, our ethics, take pride in being American and remember what that means, use resources well and deliberately and look for value and pursue happiness instead of chasing quantity and entertainment.

    As long as "buy more stuff and watch more TV" is every leader's answer to a bad economy, we're going to go up and down until we have a huge crash. We'll be lucky if it's worse than the Great Depression. If we don't cut it out, it'll be the fall of Rome.

    Yes, mortgages. But when the bubble was big, I remember how happy all my neighbors and I were. After all, the house we'd bought for 200 (which was only really worth 120) was now "worth" 260. That's practically money in the bank, right? And if I take out a home equity loan, it is money in the bank. Lots of people benefited from a stupid system that everyone knew was based on fairy dust and we let it go as long as it favored us taking out more credit and buying more junk. I talked to someone after the crash, she had an acquaintance that bought a house with a $5000 mortgage, no money down, then lost his job. What is he going to do? Well, I said, get another job or lose his house. But there aren't any more jobs out there making that much money! Golly, he made 10 times more than he was worth for 10 years and instead of storing it up he blew it all, and now I'm supposed to feel sorry for him because his run has ended and he'll have to work for a living or move into a house without a swimming pool?

    But the kicker was, she said, how could he have known? No one saw this coming.

    We all saw this coming. We just thought we could get ours before the crash hit.

    Next up, credit. Business credit, credit cards. Then inflation. Then a world collapse from state borrowing -- China owns us now and if China falls into chaos the world will. The people I listen to say get out of the cities. It would be nice if that were wrong, maybe this is just another warning shot and we'll listen this time. . . .

    Practice for my manifesto? I've got to get that written. . . :p:rolleyes:

    P.S. Thanks, Heather, if you're running a business the deck is stacked against you and you are doing us all a service if you can keep on making it. Best of luck to you, you're an American hero (not that I tend to the dramatic or anything, but it's how I feel). :eek:
     
  3. swellman

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    In all honesty, I really don't see a bad economy around here. A couple of restaurants around closed but no more than the usual turn around. I live in a big banking area so there were a few jobs lost but this "horrible economy" is just not obvious.

    There could be several reasons for that and the housing bubble being one of them - we just didn't see a big bubble. Houses that were purchased for around $350k may have risen a little over $400 but that's about the extent of it. No one around here was taking interest only loans and buying houses thinking they would double, or more, in a few years - not like the Baltimore area where we spent 18 months. Similar houses in that area were listing for 2.5 times what they were in NC. Our house is worth at least what we paid for it in 2003. Granted, there are several on the market so, perhaps, that's our evidence of a slow economy.

    I've talked to several small business owners like painting, land scaping, fencing, etc. and they all told me they were busy. I hear no rumors of foreclosures and our private school hasn't had many leave and my IRA's have recovered.

    Maybe I'm completely oblivious or just fortunate to be in a area that wasn't hard hit but I'm feeling pretty upbeat about the near future.

    But as far as blame, I knew a close relative of a good friend who was writing loans in the Baltimore/DC area and he was making $30k/month for a good while. It doesn't take a rocket scientist to know that whatever mechanism that was driving that part of the economy wasn't sustainable. It was greed but a loan takes two so, there's a lot of blame to go around in that area.
     
  4. StillMamamia

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    Good topic!:)

    I'll let the experts chime in on the one, as I have no idea about economics.
    But I'll have to say that credit is probably the worse invention since Spaghettios. Immediate reward when one does not have the means is just...stupid? That goes for physical and corporate persons.

    Carry on.:D
     
  5. jilmarie

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    There was a great episode of This American Life called The Giant Pool of Money that explained the mortgage crisis in basic terms to a general audience. The episode won a Peabody Award and can be streamed for free at the link above.
     
  6. Becky Stevens mom

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    I think alot of things have affected the economy. How much money is taken from us in taxes is a major thing that affects alot of people. Our national debt is enormous, when I think of trillions of $s I feel sick. How can we ever get that paid off? If people had more money after taxes were taken out they would buy more thus stimulating the economy.

    I grew up here in CT in the "60"s. Back then most small citys had mills and factories that were in full operation and had hundreds of people working for them. Not far from me was The American Thread company. This mill made thread for much of the country if not the world and had hundreds of people working there. They closed in the 1970s as did many other mills and factories in Connecticut. Driving past them now and thinking of all the people that worked in them makes me sad:( Many of these things are now made in China or in other countries that can make it cheaper. Made in America is a rare thing to see on a tag these days. I think thats where alot of jobs have gone. When I was young a person could get a decent job with a high school diploma, buy a house and a car, work till retirement and live their golden years in peace. Now people with college diplomas are struggling to find jobs and if they do house prices are still out of range for many. I agree that there are areas of the country that dont seem as badly hit but for the most part people are struggling every where to some degree.
     
  7. grantsmom

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    Well I can tell you where I live and for my friend's and neighbor's this is the worst economy ever. People in all walks of life are effected. I could write a page of the horror stories and struggles around me.

    What started this...lots of things. I believe the perfect storm occurred and in some ways there was a knee jerk reaction that made it even worse.

    I will state again that I am a Republican BUT I did decide to rent Michael Moore's I Love Capitalism (I think that was the title :confused:) from Net Flix. You know...if you watch it with an open mind a lot of what he points out is very true.

    There has to be a balance in life. Spending should balance out saving, debt should balance with income.

    All I have to say is that I, my family and my friends have learned a lot going through the past two years. First and foremost is that you reprioritize what is really important in life....family and friends not money and material things.
     
  8. Heather(CA)

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    Consider yourself lucky...It is bad here in CA. And I'm sure some other key areas....

    This is not directed at swellman or anyone in particular, I just wanted to say that for the record, I am not a big spender. I drive a nice but practical car, My furniture is old. My appliances are the originals. We bought a bedroom set and a Temper pedic mattress but that's about it. We don't have a boat etc...I don't go around spending a bunch of money I don't have that's probably why I feel like a victim of this economy. I was able to sell Rainbows in a way where if I did two demos in a row I felt like I was in a slump. Then all of a sudden, no ones credit would pass. It's very frustrating. Then my Chase card (Hate Chase) lowered my credit line and doubled my min. pmt. I had not been late or anything, they just did it. That shouldn't be legal. It also affects your credit when they do that because it looks like you maxed it out. I didn't. Grrrr This stinks!

    Hubby worked as a construction superintendent until the Governor turned off the money to build schools. There was NOTHING going on for a year, now there is very little. He wouldn't have a job now if he wasn't so good at what he does. Who knows how long it will last?
     
    Last edited: Jun 28, 2010
  9. Brensdad

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    In short, the housing problem is what's causing the problems, and it also spills over (no pun intented) into what Swellman says. The mortgages were given to people that never proved they could repay them, and then those mortgages were bundled and sold on the open market by places like Goldman's. When that much "bad" money works its way into the economy, it can be pretty awful.

    It is quite true that many describe not really noticing that things are as bad as they hear, and there are a couple of reasons for that in my opinion.

    1. People "feel" economic hardships when state programs begin to fail, and state programs have been supported by stimulus money that will soon run out.

    2. The looming problem is runaway inflation, which masks short-term ills but is very serious later on.

    3. Companies are reporting revenue they expect to earn next year now in order to pay their taxes at a lower rate. I suspect next year will be pretty bad because corporate earnings will not be good.

    There's a lot to it, but that's just my short-story version.
     
  10. Heather(CA)

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    Thanks that's what I was thinking but I wasn't sure...I also think that CA has it's own set of problems above and beyond what the rest of the country is dealing with. Not counting of coarse the areas hit by the countries problems really hard. I don't mean we have it worse than them:(
     
  11. Brensdad

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    It also occurred to me that gas prices are not sky-high right now, nor are food prices. Two summers ago, they were both high, and that HURT. The problem is that low gas prices right now is not necessarily a good sign...Gas prices are low because demand is low (due to stagnant worldwide economies), and the dollar is much stronger against foreign currency, especially the euro. The euro has big problems right now, but fortunately at the G-20 meetings those governments agreed that racking up more debt would not be useful and spending should be restrained. That should help the euro, and the world economy, but also drive down the dollar (unless we do the same), and cause gas prices to rise.
     
  12. Heather(CA)

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    Geeezzz when did $2.99 a gallon become low gas prices...I can remember paying 81 cents:eek: Ahhh the good old days, I think I'm dating myself lol
     
  13. StillMamamia

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    Just wanted to add that the economic crisis is worldwide, at different stages.

    Where I live, amazingly enough, habits are hard to die. In general, people will continue to live as before, just because it's a pride thing. Generalizing, of course. It is badly seen to admit one has financial problems, so the tendency is to keep up the good face.

    Personally, we shop at the cheaper stores, because they are cheaper. Go figure. But people will tell us how the quality is not good there, and how people who shop there are "low class".:rolleyes: It's very frustrating to have financial problems in a place where you're not supposed to have any.:confused: Guess it's a cultural thing.

    Same thing with cars. In a village where there are a lot of Audis and Mercedes, it's like a fly in milk driving around a clown car.:D (that would be me)

    Not sure what my point is. Maybe I don't have one. But thanks for letting me vent a bit.
     
  14. hawkeyegirl

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    I think you actually make a good point, Paula.

    It is hard to be financially responsible when it looks as if everyone around you is living the high life. It's a lot less fun to pay off your credit card every month and spend less than you make than it is to drive a fancy car and put in a pool.

    One thing that really acts as a reality check for me is that my job puts me in a position to see the nitty gritty of a lot of folks' finances. You would be horrified if you knew how many successful-appearing people are teetering on the brink of disaster. Who have a beautiful house and fancy cars and send their kids to private school, and who don't have two cents to rub together.

    I guess my point is that it's often the ones who look like they're just rolling in the dough who are actually in a very precarious position. You don't want their problems, even if it means driving a clown car. ;)
     
  15. Heather(CA)

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    I hear you Paula, we are doing the same thing. We also go where there is more bang for your buck. I have to have a decent car for work. I drive a lot so I want to be safe. but it's not fancy just practical. It's a 2003 accord, but it does have a spoiler on it:D It was there when I bought it (used) I would have never forked out the $500 bucks it would have cost to put it on...No way!
     
  16. SueM

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    Debt, debt, and more debt... Paying off debt by getting into more debt. What a mess. I listen to Ron Paul on economy issues. The Federal Reserve is corrupt from the top to the bottom. Sad, really. :mad:

    I'm sure no one here is shallow enough to watch The Real Housewives of NJ or anything but on the off chance... it bugs the crap out of me when I watch that Theresa woman going out and spending bazillion dollars on crap and then finding out that she and her husband filed for bankruptcy. That sort of stuff just repulses me. Don't get me wrong, I understand that things happen with people's finances that are out of their control and I would have some sympathy for them if I didn't see them spending tons of money that they don't have and knowing full well that they haven't stopped doing that despite the bankruptcy...
     
  17. Brensdad

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    It wasn't that long ago that we were at $4 per gallon, remember? And that hurts, because it hurts virtually everyone. I believe gas was 88 cents per gallon when I began driving.

    The problem is that real estate has always been a reliable way for economies to recover from recessions (it usually provides equity and liquidity to finance small businesses, which have always been what helps to end recessions). In this case, real estate still is not finished "correcting," and so the only thing left is commodities, and you don't want that driving a recovery.
     
  18. mom2kenny

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    This country has taken God out of the schools,out of our govt,and some don't even want his name to be written on our money. Can't say the Pledge of Allegiance in school. The list goes on and on. God will not continue to bless this country.He can bring this country to its knees!This is just my opinion,and my belief,and not meant to begin a religious debate.
     
  19. StillMamamia

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    Respectfully, I fail to see how bringing God into all aspects of life would improve the economy.

    I know this is about your own country, but I'll add that some countries where religious fervor is very very strong (Brazil for instance) have desperate economic situations.
     
    Last edited: Jul 4, 2010
  20. hawkeyegirl

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    This country was FORMED because people did not want a particular religion forced on them. If God was p.o.'d at the United States, you'd think he would have done something about it back then, instead of waiting to cause the current economic crisis. :rolleyes:
     

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