Wednesday, February 20, 2008

To Recess or Not

Are we in a recession? How long will it last? One CNN article says 2009. Here are the comments:

It always seems that every time there is a recession, people start commenting on how“well that’s it, party’s over, get ready for a permanent decline in the standard of living”And then a new era of growth begins. Now in the 80’s it was largely a result of massive defense spending, but a lot of people made money on Wall St.In the early 90’s the ‘party was over’ again, and then we had the internet explosion.Now, again ‘the party is over’ but I think that we are on the edge of a new era of energy production. Real energy production - geothermal and chemosynthetic. There will be a huge energy boom soon (once the oil industry reps are out of the White House perhaps?).Another poster is right - these reporters love to jump on the gloom and doom wagon as soon as possible and scare the heck out of regular people who do not understand the nuances of the market.
I’ve never seen more of our citizens here (mostly retired) tighten up. A 2K version of the 1930s seems a certainty. Less familial dependence, more gardens, wind generators, barbwire, and ammo - the older among us seem to have a strong inkling as to what’s next and many have said ‘We won’t be spending our way out of THIS one’.

I agree with Reality, why is it that the people who have borrowed more than they can repay have to be bailed out by the people who are saving money & trying to take care of themselves. Everything is backwards, teach saving, not spending & Berneke, you need to quit reducing interest rates, the people who learned from the depression & saved money, now are being punished again by the low interest rates.

I remember in college in 88 my Economics professor saying that you can spur the economy two ways. The easy way is to encourage the masses to spend, the prudent way is to encourage the masses to save and invest. The second being substantive and slow, the first being fast and built on sand. I remember that because we were coming out of the early 80’s when a GOOD mortgage rate was 13-15% and Reagan was pushing spending. It was a great quick fix that lasted close to 20 years, but here comes the wave, and there goes the sand.

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