| We hope you enjoy your visit. You're currently viewing our forum as a guest. This means you are limited to certain areas of the board and there are some features you can't use. If you join our community, you'll be able to access member-only sections, and use many member-only features such as customizing your profile, sending personal messages, and voting in polls. Registration is simple, fast, and completely free. Join our community! If you're already a member please log in to your account to access all of our features: |
| U.S. Stagflation Fears Overblown | |
|---|---|
| Tweet Topic Started: Apr 16 2008, 04:04 PM (168 Views) | |
| Dandandat | Apr 16 2008, 04:04 PM Post #1 |
|
Time to put something here
|
|
| Offline | Profile | | Quote | ^ |
| Dandandat | Apr 16 2008, 04:06 PM Post #2 |
|
Time to put something here
|
So your crappie raise is a good thing this year, remember that the next time you complain to your boss for more money.
|
| Offline | Profile | | Quote | ^ |
| Hoss | Apr 16 2008, 04:45 PM Post #3 |
![]()
Don't make me use my bare hands on you.
|
raze? what did I demolish? |
| Offline | Profile | | Quote | ^ |
| Dandandat | Apr 16 2008, 05:01 PM Post #4 |
|
Time to put something here
|
what are you talking about?
|
| Offline | Profile | | Quote | ^ |
| Admiralbill_gomec | Apr 17 2008, 11:58 AM Post #5 |
|
UberAdmiral
|
I agree with the article, regarding the premise. The idea of stagflation would have been mentioned were this not an election year. It is just the press trying to create traction for a non-news story. I'm glad Forbes posted some facts rather than add to any overblown hysteria. I'm waiting to see someone repeat the line, "This is the worst economy in 50 years!" |
| Offline | Profile | | Quote | ^ |
| Dandandat | Apr 17 2008, 12:02 PM Post #6 |
|
Time to put something here
|
I don't agree, I think this article would have been written regardless of an election year. Its not as if the professionals aren’t up about the current economic down turn, the same issues being disused on main street are being discussed on wall street. There for it is not simply unintelligent hysteria that is driving the speculation. Further more, in the general population it is not the fact that the media has hipped the issue that has worried people about the economy, although it doesn't help. People have been hit in three very important places, their home value is down, the cost of living has gone up, and their easy accesses to credit has gone away. Now this alone does not bring the macro economy to a stand still. But it does hurt the individual who doesn’t know or care about GDP or trade deficits. To these people the economy is their house and their eggs and when these things are disturbed they are going to believe things are worse then they might other wise be. Add to that the increases in lost jobs and its more understandable why the individual thinks the economy is doing badly. The media simply picks up on this fear and amplifies it. |
| Offline | Profile | | Quote | ^ |
| Admiralbill_gomec | Apr 17 2008, 02:07 PM Post #7 |
|
UberAdmiral
|
Not the Forbes article, Dante, but the original talk of stagflation. I first heard it on the radio Monday morning as I was dropping the demonspawn off at school. I read this article as a correction to the attempt at fear generation. Yes, the economy could be better. It is harder to get credit, and y'know, I think it should be (hear me out). Banks were pressured to make credit available to certain demographics with a traditional history of lower than average credit. These same people had sub-prime mortgage options waved at them. They looked at this as an opportunity to get a home in a world where the value of homes was steadily increasing. Unfortunately, the double whammy of variable mortgage changes and the peak in the housing market happened at the same time. The problem is (and I have stated this many times) that people in this country no longer receive basic educations in economics. For some who say, "I didn't know this could happen" they really didn't know. Between that and speculation in real estate, this was going to happen at some time. The original idea of the sub-prime mortgage was to give people a chance to get equity in their homes, and when the time came to change to a fixed rate or face higher interest rates, found themselves with much higher interest rates. One problem is that they chose too much house. Realtors (and remember, my wife is one) were often pushing the "you're fine as long as your housing costs are less than 29% of your gross income." A lot of people bought into that. Suddenly the scale tips, and they find housing costing say, 35% of their income. Why? Because their credit was still not as good as it could be, despite making house payments, which disqualified many for fixed rate loans at decent rates. My wife uses the 25% of gross income figure when she deals with first time buyers, and also warns that if you get a variable rate mortgage, look for something like a 5/25 type if you can. The real truth about the sub-prime bubble is that if affected (overall) 6% of homeowners. Problem was that most of these people were recent first-time buyers and at the lower end of the income spectrum. The housing "bubble" was bound to happen. It had to, even without the sub-prime mortgage problem. You'll see the same with oil this summer, probably in August. That should hopefully ease the ridiculously high speculative prices in the oil industry this year. |
| Offline | Profile | | Quote | ^ |
| Dandandat | Apr 17 2008, 03:42 PM Post #8 |
|
Time to put something here
|
Bill, I don't understand the need for you above explanation; it all may be true (though I do have disagreements with some of what you said) but it does not speak to your original point that current economic fears are media driven. As for easy credit, you may be right that it should be less easy to get. But that does not change the fact that for a long time it was easy to get and that many people had factored it into their way of life rather then a finical tool. When it went a way these people found themselves short and they factor that into how they see the economy. So here they are, there biggest asset (and perhaps only asset) has just deprecated in value (for what ever reason, their fault, the banks fault what ever), their cost of living has gone up (they don’t care or know or believe its only going to be temporary as this article suggests), and they can't get the credit they need to make ends meet. Then they here that unemployment is going up. For this person the economy is bad, it may even be the worst it has been in 50 years. But I do not agree that Banks where pressured to make credit available to certain demographics with a traditional history of lower than average credit. The government in an attempt to shorten the recession of 2000 made an error in judgment and flooded the market with to much money. Banks took the opportunity to make higher revenue by issuing more loans with that excess of cash. First they went reputable barrowers, but when that well ran dry they moved to less reputable barrowers. They where afflicted with hubris; they came to believe the risk was not as high as the reward. They later found they where wrong. But they where not pressured to do anything, they walked into this pile of dog excrement all by them selves and led a lot of people with them, investors and customers alike. But that’s not even the beginning of the story. The story begins in the 80's when banks found they could use commercial paper conduits to circumvent bank regulations that prohibits them from lending more money then they are able to service. It was not sub prime loans that caused the meltdown in the credit market, it was this method of banking that caused the problem. When the sub prime sh!t hit the fan peoples eyes where opened at their bad practices and they all pulled back. Banks no longer wanted to do business with other banks because they no longer trusted each other. They didn’t trust each other because they knew of the skeletons in their own closets and assumed the other guy had it worse. The biggest problem I see coming out of the last year is that the underling banking practices problem is not going to be fixed, the banks have effectively weathered the storm at the expense of a lot of people, and so see no need to mend their ways. The government wont fix the problem because Banks are big contributors. I just worry what will happen next time something like this happens and whether banks will be able to pull them selves out of it. |
| Offline | Profile | | Quote | ^ |
![]() Our users say it best: "Zetaboards is the best forum service I have ever used." |
|
| « Previous Topic · Politics and World Events Forum · Next Topic » |




9:32 AM Jul 11