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Why the economy won't 'recover' any time soon

California

California

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I've commented in a few threads that the top 20% (my guess) of economic activity over the last 15 years was fluff, imaginary wealth created by borrowing, and spent for stuff nobody needs. I have used the example of drawing on one's home equity line to buy jetskis for the family.

I don't expect this source of buying power to return for a long time - not until everyone has forgotten the lesson that home prices can't climb forever.

I conclude that we are going to live in a somewhat smaller economy for a while. Probably several years.

thanks_bill_clinton.jpg
 
Big Dog

Big Dog

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Ahhh sub-prime lending endorsed by the democrats the last 6 years (Oh thankths Barney lovey .... :gay:) and our liberal president piling on is why I'll never see a recovery!
 
California

California

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That's pretty broad. I think you're overlooking the early 2000's when the Republicans controlled everything. That's where a good portion of that climb occurred.

Bush hardly stopped the trend when he took office, he accelerated it. Find y2k ~ 2004 on the chart!
 
thcri

thcri

Gone But Not Forgotten
I believe the wheels were already in motion. It takes a large ship a long time to turn around.
 
Big Dog

Big Dog

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What's been done it the last 6 months overwhelms what was done in the 100 years before, come on!!!!!!!!!! The only reason Bush obliged is because he was willing to work with the spendocrats. See what it got us!!
 
Deadly Sushi

Deadly Sushi

The One, The Only, Sushi
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Big Dog said:
What's been done it the last 6 months overwhelms what was done in the 100 years before, come on!!!!!!!!!! The only reason Bush obliged is because he was willing to work with the spendocrats. See what it got us!!
Click to expand...


ahhhhh.... he did it because he was told it was the best thing to do from his advisors and Bernake.
 
Melensdad

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
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California said:
That's pretty broad. I think you're overlooking the early 2000's when the Republicans controlled everything. That's where a good portion of that climb occurred.

Bush hardly stopped the trend when he took office, he accelerated it. Find y2k ~ 2004 on the chart!
Click to expand...

While Bush did nothing to limit government, and while Bush did not reverse the policies that cause this mess that were put in place by the Democrats, it is clear that Bill Clinton's administration, Barney Frank, Chris Dodd and several key Democrats have their fingerprints all over this mess.

As for Bush accelerating it, no again he did not. The system was in place, the momentum and greed were simply kicking in in full gear and the people accelerated this. This call goes back to the Community Reinvestment Act and spins out from that.
 
X

xsinawl

New member
My opinion is that you can correlate the above chart with one showing interest rates pretty well. Remember that in the early 90's the debt was refinanced using short term notes. Since that time the dance has been to prevent interest rates from rising because that would be a small problem in and of itself- but not near as big as this one....
 
California

California

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Site Supporter
I'm not going to argue the origin of the trend. I will add that the invention of exotic derivatives where there was no regulation requiring balance sheet disclosure, was another element of the recent crash.

But the point I wanted to make is that today and looking to the intermediate-term future, the huge growing source of funds based on home equity increases has disappeared. Without that source of funds available to consumers, I don't expect consumer spending to return to recent levels any time soon.

So don't expect 'recovery'.
 
Melensdad

Melensdad

Jerk in a Hawaiian Shirt & SNOWCAT Moderator
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I think the main point of your thread is well founded. We could argue about some specific causes, fact is it doesn't really matter anymore as it is in the past.

Reality is what we are dealing with now and you point is made and I think agreed upon by most. This is going to be a long, slow recovery and while we need to look at savings rates and things like that, the fact is that consumer spending drives this economy and it will very likely be weak for some time to come.
 
SShepherd

SShepherd

New member
California said:
That's pretty broad. I think you're overlooking the early 2000's when the Republicans controlled everything. That's where a good portion of that climb occurred.

Bush hardly stopped the trend when he took office, he accelerated it. Find y2k ~ 2004 on the chart!
Click to expand...


[ame="http://www.youtube.com/watch?v=63siCHvuGFg"]YouTube - McCain's Early Recognition of Fannie/Freddie Crisis[/ame]
 
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