www.byzcath.org Forums General Discussions Town Hall Anyone else getting worried about the economy?

Question for this wise council of Byzantines.

Lately I've been reading a lot about the economy, and it's downturn. I've also been reading a lot from economist who think things are going to get REALLY BAD.

I'm 27 and remember the Y2K scare and the prepping that went on. I never bought into it, but was intrigued and filmed a mockumentary on Dec. 31st 1999 going into 2000.

Anyways, I'm rambling. This economic threat seems real to me. The doomsday economists that I've read have been right on a lot of issues leading up to what they think is an economic meltdown. I just read a book where the author said that Fannie Mae and Freddie Mac would need a govt bailout which was written sometime last year and this is now coming to fruition along with the dollar hitting record lows, food and fuel costs rising, housing burst, and financial instutitions showing signs of trouble.

My question is do you remember a time when people were talking like this? How about the stagflation of the 70's? Was there a lot of talk about an economic doomsday then?

I really would like to set some food aside and put some money into precious metals "just in case". If they end up being wrong, I'll just have to eat my extra food and I won't be out anything.

Thoughts?

Nathan

Nathan,

Things are probably going downhill economy-wise currently. However, I do not believe that there is any indication that this downturn is anything more than the regular downturns that every healthy economy encounters.

For example, take the housing market (please!). For a while, this market was in a bubble, and the healthiest thing to happen would be a correction, and a correction is exactly what has occurred. This is a good thing, as it aligns prices more with reality. It also reminded people with short memories (i.e. most people) that housing prices do not infinitely and consistently rise.

There is nothing today that is any different than other corrections/recessions that have occurred in the past. It is painful for many while it occurs, but it is not the end of the American economy as we know it. Personally, I plan on investing more in stocks right now, as prices are cheap.

Thanks for your thoughts Francis.

I think one problem is the government trying to always prevent the economy from correcting itself by bailing out Wall Street Bankers who have more money then I'll ever see, and trying to keep the housing market rising into infinity.

I hope you are right. I'm not a homeowner so I still think the housing costs are WAY too high.

Just think what a house cost 10 years ago versus now even with the market coming down. Wages have NOT went up that much in 10 years, so BRING THOSE PRICES DOWN. hahaha.

A valid point. Most government "fixes" do the exact opposite. The bail-out of companies - and the bail-out of consumers who made bad decisions (as in the housing loan market) - rarely do anything to help the economy. They just help win elections.

My income depends on the health of the oil and gas industry. Unless major oil companies are squeezed out of America, I will not be worried about future prices. I expect that I would be able to absorb a rise in inflation because of the strength of the industry my home depends on.

My major concern it that private assets are shrinking. When people borrow off of their mortgages, they lose the equity they had in their home. There will be trouble if there is a loss of trust between lenders and consumers.

Terry

Oil jumped to $110 a barrel today, foreclosures are up 60 pct from last year, the dollar continues to drop against the Euro, we're in debt to China, and unlike the Vietnam era, a major war won't get our industry booming again, because most of it has left the country. I'd say we're in trouble.

Yes I am worried. Plant your garden well. Started raising chickens, rabbits, and goats. Get a cow if you can.

Nathan,
I don't know about putting food away. If I were you I would pay down all of my debt-credit cards, etc. Don't put anything else on credit as of today. Save your bucks by cutting out any frivolous spending such as Starbucks, etc. Live as cheaply as you can and you'll be ok. That is my plan.

Sam

Don't forget to buy American made products whenever possible.Yes, it's more expensive, but must we have everything we want NOW, and do we really need twofers? As nice as it is to get all six pieces of patio furniture on sale or at a bargain why not buy american made furniture one at a time over a few years and improvise pieces until the full set is purchased?

Bargains and sales are made possible either because it's cheaply, and that usually means foreign made, or the company is skimping on employee benefits to offer the sales Americans can't seem to live without.

Do stock up on food as much as possible. The can of tuna that was 50 cents last summer is $1.65 today. The 50 cent can of corn is $1.20. With wheat over $10.00 a bushel and oil passing $108.00 a barrel it is only prudent to have a goodly supply of food on hand with prices rising this rapidly. If prices drop you just have extra food on hand, but if they double a supply of food might be a matter of life and death, or at least avoiding choices between paying rent or buying groceries,

I was speaking with one of my friends who was a child during the depression. She was bewildered at people who refinance their homes for the pursuit of luxury. She said that even for investment it's risky. There were many people during the depression who would have been in trouble if they didn't have ownership of their land and homestead.

Our economy is strong at the moment. Our unemployment is near the historical low and consumer spending is still reaching the volumes it needs to sustain growth. It's the future that the speculators are worrying about. There is uncertainty; they are worried that the adjustments in the market will be sharp, rather than gradual. That could explain why the FED is being so aggressive at this time.

The barrel price of oil is not the price sold now between a supplier and a distributor, but the price as agreed upon between commodity traders. The volume of trade for oil futures has multiplied significantly since 2000, this is what is pushing the rise in the barrel price of oil. The rise in price in the last year has not been largely due to a rise of demand. Even though the emerging economies of India and China are putting global pressure on the demand, I think that more blame goes to the investors who are shifting large portfolios to oil in response to their worries about the credit market.

The value of the dollar is not fixed. It is set by its market price in relation to other currency. This floating value is different than the silver or gold standards of the pricing seen some time ago. It has its benefits and its risks. It becomes risky when the perception of its value reaches a point when holders of treasury bonds or other securities tied to the dollar decide en masse to dump the currency. If that happens, it will not immediately wreck the internal economy of the United States; but it will affect trading. It�s like a rich man who declares bankruptcy, it will take some time for banks or lenders to loan him money. He�s going to have some hard times but he can pull through if he stays focused.

If our economy melts down, it won�t be the end of the world.

Terry

economy? what on earth are you talking about? there is no economic crisis, no problem with people losing their homes due to the mortgage situation, no war in Iraq or Afghanistan, no health care crisis, environmental concerns, education problems. what we need to be concerned about is all those homosexuals wanting to get married to each other. THAT'S the real issue facing our country!at least that is what some people would like us to believe.
Much Love,
Jonn

Is this a reply to my post or the topic?

At the moment the mortgage situation is a short-term adjustment. It is uncomfortable, but there are consequences to economic choices an economy makes. When the belt tightens, the consequences may become even more apparent--like with the consequences of ARMs, or the consequences of over-inflated regions where too many people had been speculating the price of homes.

I had no intention to be dismissive of the problems in the economy or with health care, but to be a long-term crisis there will have to be a greater loss of trust in the value of currency. If people begin to stuff money in their beds, if they start withdrawing all their cash assets from their bank accounts, then we have a problem.

Terry

NATHAN:

Having lived through the high inflation of the late 1960s, 1970s, and 1980s, let me offer some advice.

Make yourself a list of all the things you spend money on. Then separate that list into the "needs" and the "wants." Be VERY critical about calling anything a "need" and simplify your living and spending habits. Go to the thread we had going awhile back about "Saving a buck" and incorporate some of the ideas there into your lifestyle.

We tend to spend far more than we need to do. For example, think about "brown bagging" your lunch every day. My son does taht and has saved himself a bundle of money that he invests. A loaf of bread, some lunch meat or PB&J, and a bag of apples goes a long way to provide a cheap lunch every day at work. Buying in bulk and sharing with someone else also saves a bundle, as does freezing as much of a large purchase as possible.

The economy goes up and down. The problem is that a rare 20-year "up" coming out of the Reagan years gave everyone the idea that prosperity was permanent and would never stop. Usually these corrections come along with every decade.

BOB

Fine. And how long will your stock pile last? I doubt that you will have enough squirreled away to last through a depression/recession.

Why not store 50 gallon drums of Gasoline in your back yard?

Forgive me for being so angry here but what happens is going to happen or not. We aren't going to be able to do much about it

Converted Viking