|
| Wednesday, July 16, 2008 |
| Best-case scenario is mild recession |
The USAToday article: Economic pain: 'Payback' for debt-fueled growth? indicates that our current economic woes are likely to get worse and be with us for a long time to come. If it wasn't clear before Tuesday, it is now: This is no ordinary economic crisis, and it won't be over anytime soon. In fact, problems are multiplying. A year ago, the financial virus seemed confined to subprime mortgages, defaults on loans given to those with less-than-perfect credit. Now, much of the banking system appears rickety, and the U.S. economy has slowed to a crawl. But thanks to robust demand from still-growing countries such as China, the prices of commodities from oil to food have soared — hitting Americans from the gas pump to the grocery checkout.
"There's no hope of an early recovery at this point," says economist Kenneth Rogoff of Harvard University. "The best-case scenario is we have a long but mild recession — and that's the best-case scenario." While I am generally a glass-is-half-full kind of Gal, in this instance I am thinking we are headed for worse-case here. Hopefully I will be proven wrong. |
| posted by Boston Gal @ 10:07 AM *
* Subscribe to Boston Gal's Open Wallet |
Links to this post:
|
| 2 Comments: |
-
I am not trying to toot my own horn but I have seen this for years coming. Farmers are paid by our government to quit farming and raising livestock to keep the prices artificially high so they could keep a profit. So many farmers got out of the market, they sold their land to developers making McMansions. People needed to buy these houses, and then the government asked banks (subsidized by the government) to go subprime. Banks over extended with the subprime even with the government subsidies. So they created ARMs to remain competitive with other banks to keep new cash flow coming in and digging them deeper into the hole.
So now .. we have less farm land and working farms making less food, more people in houses they cannot afford, and banks going bankrupt because they dont have the money. The price of oil was predictable as other counties are eating from the same pie we used to enjoy all for ourselves (ie. demand for oil).
All you can do is hope you have a good job, in a market that won't go away, make more than your monthly expenses, and wait it out.
I sincerely hope everyone comes out the other side okay.
-
The price of oil seems to be headed down lately. I wonder what effect that will have. It should help somewhat with inflation since it doesn't cost as much to ship things.
|
| |
| << Home |
| |
|
|
|
|
I am not trying to toot my own horn but I have seen this for years coming. Farmers are paid by our government to quit farming and raising livestock to keep the prices artificially high so they could keep a profit. So many farmers got out of the market, they sold their land to developers making McMansions. People needed to buy these houses, and then the government asked banks (subsidized by the government) to go subprime. Banks over extended with the subprime even with the government subsidies. So they created ARMs to remain competitive with other banks to keep new cash flow coming in and digging them deeper into the hole.
So now .. we have less farm land and working farms making less food, more people in houses they cannot afford, and banks going bankrupt because they dont have the money. The price of oil was predictable as other counties are eating from the same pie we used to enjoy all for ourselves (ie. demand for oil).
All you can do is hope you have a good job, in a market that won't go away, make more than your monthly expenses, and wait it out.
I sincerely hope everyone comes out the other side okay.