Economic gloom and doom

[maldorf]

Someone on public radio today was saying that some authorities out there are comparing what is happening in the US today to the decline of the Roman Empire! Even Obama and his cabinet seem to think that this may be a crash that we never recover from. The romans devalued their money as we are, and spent way too much on wars abroad. Those two things we do share.
Anyone out there that knows a lot of history that could chime in on other similiarities between the Roman Empire and the US today? Whole thing sounds rather silly, but it gets the wheels turning.

 

[ssdark1]

it does sound a lil crazy when you first hear it but once you do the proper research you realize that it would be crazy if it didnt happen. just a matter of time, and im of the opinion that the time is closer than most realize.

our civilization isnt going to just disappear but it will not be the same...

 

[Steve123]

Someone on public radio today was saying that some authorities out there are comparing what is happening in the US today to the decline of the Roman Empire! Even Obama and his cabinet seem to think that this may be a crash that we never recover from. The romans devalued their money as we are, and spent way too much on wars abroad. Those two things we do share.
Anyone out there that knows a lot of history that could chime in on other similiarities between the Roman Empire and the US today? Whole thing sounds rather silly, but it gets the wheels turning.

The Roman Empire was using up Natural Resources at a clip that could not be sustained. Their prowess with Metalogy (sp) - treating Ores to create different metals - was not reached again until about the 1700's. This could be analogous to our useage of Oil and other natural resources. There was also this kind of contstant infighting between those who wanted a self Governing body and those who wanted an Emperor. That could be similar - albeit a stretch - to our own infighting between those who want monolithic goernment control of the means of production (democrats) and those who want total deregulation and capitalistic anarachy (republicans).

The Roman Empire was facsinating in one very important way. They were so advanced at that early time that if they didn't fall, it is literally awe inspiring to consider how far advanced tech woulbe today.


Here's the thing though. If you're old enough, you certianly remember the crash of 87. That crash was mainly brought on my escatating trade deficits (pre-NAFTA), a retroactive and very large tax code change (TRA 86), which among other things, made losing money on Real Estate Partnerships a loosing proposition. It defined different income types and pegged losses to their derivative source only. That basically sank the real estate market.

When Enron and Worldcom fell 10-12 years later and the economy tanked, the same things were said.

In short, every economic crisis is different but the same on one level - the news media will always talk about the end of the world.

 

[EasyEJL]

Someone on public radio today was saying that some authorities out there are comparing what is happening in the US today to the decline of the Roman Empire! Even Obama and his cabinet seem to think that this may be a crash that we never recover from. The romans devalued their money as we are, and spent way too much on wars abroad. Those two things we do share.
Anyone out there that knows a lot of history that could chime in on other similiarities between the Roman Empire and the US today? Whole thing sounds rather silly, but it gets the wheels turning.

its not spending too much on wars abroad that is hurting us, its spending too much on pointless domestic initiatives that the federal government shouldn't be spending money on as far as our constitution says, while not collecting enough taxes to cover it. The 1-year INTEREST payments on obama's first year of deficits is larger than what was spent on iraq any year. While telling america to tighten their belts, federal spending went up by 8% in obamas budget.

Watch this movie, this is the 30 minute short version, done by the Controller General of the US government - the chief accountant of the GAO - the government accountability office.

http://www.youtube.com/watch?v=O_TjBNjc9Bo

And although i'm harping on Obama a little, Bush was almost as bad, and no president has been good. My problem with Obama's policies are that he is accelerating spending even faster and on entitlement programs which we all know are miserably hard to reduce or remove later. We've operated at a deficit since the civil war, and the times where (during the clinton years) we were told we had a balanced budget or surplus were a lie as instead they took the money that was surplus to social security and rather than putting it into the SS reserves added it to general budget dollars and spent it.

So its really non-partisan, but basically we either need to raise taxes significantly or reduce spending significantly. I go for reducing spending, allow people to make their own financial choices, let states decide what they want to do. Our federal budget has grown to over 20% of the gross domestic product now, which is ridiculous.

 

[mikeheavypecs]

Someone on public radio today was saying that some authorities out there are comparing what is happening in the US today to the decline of the Roman Empire! Even Obama and his cabinet seem to think that this may be a crash that we never recover from. The romans devalued their money as we are, and spent way too much on wars abroad. Those two things we do share.
Anyone out there that knows a lot of history that could chime in on other similiarities between the Roman Empire and the US today? Whole thing sounds rather silly, but it gets the wheels turning.

I do know from our CEO that most CEO's today are feeling that the economy is "readjusting" itself and the stock market will never go back up to where it is. This will be the norm now. I tend to believe that. We are not manufacturing shi* any more for export, everything is being imported. We will never see the economy boom like post WWII days. We are losing the abilities to create unique inventions. And we are becoming a 3rd world country due to the immigation going on now. I wish the market would soar, but I don't thiink we will see it much better than it is now......

 

[Steve123]

I do know from our CEO that most CEO's today are feeling that the economy is "readjusting" itself and the stock market will never go back up to where it is. This will be the norm now. I tend to believe that. We are not manufacturing shi* any more for export, everything is being imported. We will never see the economy boom like post WWII days. We are losing the abilities to create unique inventions. And we are becoming a 3rd world country due to the immigation going on now. I wish the market would soar, but I don't thiink we will see it much better than it is now......

Dude - they all say the same shit during every contraction. I'm telling you, if you went to the library and researched back articles of Money, Forbes, WSJ etc. you will find all those same statements.

IN fact I speficially remember watching Wall Street Week in Review with Louis Rukaiser (sp) after the 87 correction where he had the chief Economic Advisor form one of the wire houses on there talking about how the market would never again reach such lofty levels because the economy has changed, we don't do this or that, blah blah blah blah....... What happend next? Over the following 15 years, the DJIA passed the pre 87 crash level about 6 times over. And guess what, it wasn't based on manufacturing.

My two cents. It's not over until our single party system in WaSHINTON finally kills us.

 

[bf5%yes]

Sorry Steve your wrong

The boom yrs after the tech crash was due to debt expansion (credit of all kinds including housing) which is not wealth creation. If you take out the debt expansion from the GDP growth you will find there was none. It was debt. The correction you speak of never happend after the tech crash because of the fed and elected leaders blowing a giant credit bubble. Increases of debt is not a correction but production or oil is, of which we dont do much of. The debt must be removed from the system via bk, default or payment or there will be no real growth to come. The current leadership of both parties are refusing to do this, but in the end it will happen.
Wealth creation comes from production or oil not paper(debt). Look at the giant wealth transfer to the Asians(production) or the Gulf States(oil) and we traded it with exrta housing debt, credit card debt or personal loan debt and we called it wealth.
The balance sheets of consumer, a lot of business and government is tapped out and the excess will default in time because there is no bigger bubble to blow.

Your correction will not happen until then and we must start producing, inventing and drilling.

Steve please dont take offense to my comments, I do not mean any disrespect.

 

[Steve123]

The boom yrs after the tech crash was due to debt expansion (credit of all kinds including housing) which is not wealth creation. If you take out the debt expansion from the GDP growth you will find there was none. It was debt. The correction you speak of never happend after the tech crash because of the fed and elected leaders blowing a giant credit bubble. Increases of debt is not a correction but production or oil is, of which we dont do much of. The debt must be removed from the system via bk, default or payment or there will be no real growth to come. The current leadership of both parties are refusing to do this, but in the end it will happen.
Wealth creation comes from production or oil not paper(debt). Look at the giant wealth transfer to the Asians(production) or the Gulf States(oil) and we traded it with exrta housing debt, credit card debt or personal loan debt and we called it wealth.
The balance sheets of consumer, a lot of business and government is tapped out and the excess will default in time because there is no bigger bubble to blow.

Your correction will not happen until then and we must start producing, inventing and drilling.

Steve please dont take offense to my comments, I do not mean any disrespect.

I would never take offense in hearing someone present a thoughtfull opinion on something like this. I will say that you can't make a matter of fact statement that I'm wrong because that would require the presumption that you're right and we just don't know that yet. I'm not talking about the actual facts that you discuss -ex. monetary policy; only that you arrive at a conclusion that you seem to consider "fact".

You make good points and articulate them well. But, That "we must start producing, inventint and drilling" is something like presenting Facts-not-in-evidence. Which means, you guessed it, it's only your opinion for now. We do actually produce; just not as many tangible goods. We do invent. Look at the Bio-tech sector.

My opnion: we need enough regulation to prevent some of the abuses of capitalism that we've seen but not so much that we snuff out innovation and flexibility. I think this, along with some intelligent dispoisition of the debt you mentioned, would be a good start.

Call it cautious optmism on my part I guess but I just don't see the Fall of Rome anytime soon.

 

[EasyEJL]

My opnion: we need enough regulation to prevent some of the abuses of capitalism that we've seen but not so much that we snuff out innovation and flexibility. I think this, along with some intelligent dispoisition of the debt you mentioned, would be a good start.

I still don't see rampant abuses of capitalism anywhere, all we've seen is good old fashioned greed but obviously that greed encompassed about 12% of the population (as thats the amount that right now is having problems making their mortgage payments).

The snowball that started this current avalanche was the CRA - community reinvestment act - that wonderful jimmy carter put in place to force the evil capitalist banks to lend money to people who didn't qualify for the loans. The attempt to force socialist polcies onto capitalism yet still call it capitalism doesn't work. Capitalism rewards those who perform + produce, so for people who capitalism doesn't seem to be working for those people need to evaluate what they are doing. Libraries are free, there are training and educational opportunities all over.

For the most part, our political figures aren't bright enough to run a lemonade stand (or pay their self employment taxes ala Geithner) so their attempts to put "fairness" into a capitalist system are inherently doomed or at least inherently doom the rest of us. Of course instead we're seeing them just try and push it further and further into actual socialism, which would have our founding fathers turning over in their graves.

With the new credit card laws going into effect we're seeing more of the same - attempts to force credit card companies to not penalize people who use credit poorly. Does anyone BUT political talking heads think that the credit card companies will just make less profit and say "ok"? Or will they just raise interest rates and make credit less available, which is what our same political talking heads have said was a problem they had to solve too for our economic recovery?

 

[Steve123]

I still don't see rampant abuses of capitalism anywhere, all we've seen is good old fashioned greed but obviously that greed encompassed about 12% of the population (as thats the amount that right now is having problems making their mortgage payments).

The snowball that started this current avalanche was the CRA - community reinvestment act - that wonderful jimmy carter put in place to force the evil capitalist banks to lend money to people who didn't qualify for the loans. The attempt to force socialist polcies onto capitalism yet still call it capitalism doesn't work. Capitalism rewards those who perform + produce, so for people who capitalism doesn't seem to be working for those people need to evaluate what they are doing. Libraries are free, there are training and educational opportunities all over.

For the most part, our political figures aren't bright enough to run a lemonade stand (or pay their self employment taxes ala Geithner) so their attempts to put "fairness" into a capitalist system are inherently doomed or at least inherently doom the rest of us. Of course instead we're seeing them just try and push it further and further into actual socialism, which would have our founding fathers turning over in their graves.

With the new credit card laws going into effect we're seeing more of the same - attempts to force credit card companies to not penalize people who use credit poorly. Does anyone BUT political talking heads think that the credit card companies will just make less profit and say "ok"? Or will they just raise interest rates and make credit less available, which is what our same political talking heads have said was a problem they had to solve too for our economic recovery?

Good points. I guess what I mean by abuse is what we recently saw with the Banks and other lending institutions. I know the rabel rousers on talk radio would have us beleive that it was lending to minorities that sank the lending institutions but anyone close to the industry can see that as the total bullshit it really is. They Heavy weightings in CDO's, due to overly rosey credit analysis, flooded the markets with money that had to be lent. The underestimation of risk was, to use your word, pure greed driven but almost to a criminal extent. "Criminal" because portfolio managers were misleading investors - i would like to think by accident but I've been in the mutual fund business for 20 years so I know better. Then on top of that you had the big Wire Houses selling Derivatives (Swaps I beleive) that they knew damn well they could not underwrite. They basically lied about their ability to honor those instruments. That's what I mean. You can't have a system that allows this kind of shite. At the same time, we can't have the Jimmy Carters of the world trying to turn us into France either. Unfortunately, our leaders in Washington like to play a zero sum game - either heavy regulation or no regulation. I say there has to be something in the middle somewhere.

It's a very romantic notion that we should adhere strictly to the constitution but the fact is by the time the damage is done, good people loose everything they ever worked for. Its of little consolation that we should tell them that, "hey, look, it's all about capitalism and adherance to the spirit of the constitution". "by the way, sorry you lost your job. your home that you raised your family in, and half your pension...at least you know the system works, right?". Regular people have no influence over this system anymore and they have to be protected. Our very existance depends on it.

I tend to be nominally libertarian but I'm also pragmatic. IN other words, I don't think that Government should do anything for us that we can do for ourselves. Hence, the need to regulate activities that can literally destroy our economy. You and I cannot personally do much about that so we need our Government to. OUr founders couldn't have possibly had this in mind.

 

[EasyEJL]

My thinking is that the "regulation" should only be in the form of transparency requirements though. Part of what got us here on top of Carter and Clinton was the Republicans loosing the ratio of debt:equity required by some financial institutions, which just sped up the avalanche. But if people choose to take risks, then they deal with the consequences themselves. Loan money out under new programs where you have no data on repayment, you take the risk of # of defaults. If you take a variable loan thats fixed for 3 years but didn't understand what that meant then when you get thrown out of your home I can't feel bad as apparently you were willing to sign a contract that you didn't understand because it let you get something for nothing today. Or if you did understand it when you signed it, then too bad if you are foreclosed on as you knew that was an inherent risk.

"misleading investors" i'm not so sure about either. Again to me if a person can't understand the choices and chances they are taking then their receiving consequences is due to stupidity and their losses are part of an evolutionary process. Any time an investment advisor is telling you "this is a sure thing" and they happen to be making a commission off you, you should be bright enough to take it with a grain of salt So i'm not sure if the people who got caught by that or by Bernie Madoff truly were "investors" as they didn't understand investing, or that most or all of them didn't deserve exactly what they got.

and as far as

by the way, sorry you lost your job. your home that you raised your family in, and half your pension...

Do you believe people have a right to a specific job, or a specific home? I don't. Shit happens, both to good and bad people. You loose one job, you get another. You loose one home you get another. You live in an area like Detroit that has horrendous unemployment and can't find another job? Then move! Its 2009 not 1809, a 400-1000 mile move isn't crazy. You choose to stay in Detroit? then live with the consequence of your choice.

Regular people do have influence over the system if they work together, and make a splash in the media which is easy enough to do. The fact that most of the same people would rather watch "So you think you can dance" or "America's next supermodel" or other "reality" for 4 hours a night rather than even make an attempt to do something on their own isn't a fault of the system.

 

[Steve123]

My thinking is that the "regulation" should only be in the form of transparency requirements though. Part of what got us here on top of Carter and Clinton was the Republicans loosing the ratio of debt:equity required by some financial institutions, which just sped up the avalanche. But if people choose to take risks, then they deal with the consequences themselves. Loan money out under new programs where you have no data on repayment, you take the risk of # of defaults. If you take a variable loan thats fixed for 3 years but didn't understand what that meant then when you get thrown out of your home I can't feel bad as apparently you were willing to sign a contract that you didn't understand because it let you get something for nothing today. Or if you did understand it when you signed it, then too bad if you are foreclosed on as you knew that was an inherent risk.

"misleading investors" i'm not so sure about either. Again to me if a person can't understand the choices and chances they are taking then their receiving consequences is due to stupidity and their losses are part of an evolutionary process. Any time an investment advisor is telling you "this is a sure thing" and they happen to be making a commission off you, you should be bright enough to take it with a grain of salt So i'm not sure if the people who got caught by that or by Bernie Madoff truly were "investors" as they didn't understand investing, or that most or all of them didn't deserve exactly what they got.

and as far as



Do you believe people have a right to a specific job, or a specific home? I don't. Shit happens, both to good and bad people. You loose one job, you get another. You loose one home you get another. You live in an area like Detroit that has horrendous unemployment and can't find another job? Then move! Its 2009 not 1809, a 400-1000 mile move isn't crazy. You choose to stay in Detroit? then live with the consequence of your choice.

Regular people do have influence over the system if they work together, and make a splash in the media which is easy enough to do. The fact that most of the same people would rather watch "So you think you can dance" or "America's next supermodel" or other "reality" for 4 hours a night rather than even make an attempt to do something on their own isn't a fault of the system.

No I do not think people have the right to a job/home etc. I beleive that both in it's spirit and as a the matter of law that it should be (and unfortunately isn't anymore).

BUT, what I do think is that people should have a reasonable expectation to be protected against corruption that can result in job losses and other economic disasters. You cannot trust WallStreet, beleive me. I worked for a big Brokerage house and I know the kind of shit that goes on. If you leave the economy in their capable hands without some rules, WE ARE DOOMED! Not that they are all bad people but there are people that I have worked for that are complete scum bags and would steel from you, rape your wife, shoot your dog, burn your home down and go have dinner and sleep like babies - all in the name of a buck.

If they were pillars of trust, we wouldn't have needed the 34 or the 40 Acts. The problem is a few bad apples there can screw the whole Republic.


And I hear you on the ambivilence towards Civics. These tools can tell you all about the Simpsons or South Park but cannot name the three branches of USA Government. I know that's a problem.

We're pretty much on the same page; we're just coming at it from different angles.

 

[EasyEJL]

I work in the financial industry as well So I know how it goes. Complex systems have complex solutions, and nobody has a guaranteed right answer that fits all cases.

 

[therecanonlybe1]

not sure really how to reply other than people comparing this to the great depression? of course i was not there, but from clips and pictures i don't remember standing in line for days for a single loaf of bread...i think the drama is increased ten fold because we have become a material nation.

 

[Steve123]

not sure really how to reply other than people comparing this to the great depression? of course i was not there, but from clips and pictures i don't remember standing in line for days for a single loaf of bread...i think the drama is increased ten fold because we have become a material nation.

Good point. Also, we have a much more robust news media. Economic Gloom and Doom sells!!!! And it sells big time. Think of the NEw York Times, 60 minutes, 20/20 et al. as bakeries. They have to find somthing to put on their shelves to keep people coming back. They have their staple products - i.e., 5 minutes of hard news and then 25 minutes of how to select the best female hygiene products. But, for the most part, they need things that sell to put on that shelf. When you're in a slow news cycle, they have to go back and recycle shite that they've already sold once, twice, 100 times. It is very easy to put the economy on the shelf becuase it scares the shite out fo people, makes them tune in, buy papers, increases ratings.

I swear to you right now, and it's just my speculation, that this Economic meltdown was accentuated big time by the news media.

 

[EasyEJL]

Good point. Also, we have a much more robust news media. Economic Gloom and Doom sells!!!! And it sells big time. Think of the NEw York Times, 60 minutes, 20/20 et al. as bakeries. They have to find somthing to put on their shelves to keep people coming back. They have their staple products - i.e., 5 minutes of hard news and then 25 minutes of how to select the best female hygiene products. But, for the most part, they need things that sell to put on that shelf. When you're in a slow news cycle, they have to go back and recycle shite that they've already sold once, twice, 100 times. It is very easy to put the economy on the shelf becuase it scares the shite out fo people, makes them tune in, buy papers, increases ratings.

I swear to you right now, and it's just my speculation, that this Economic meltdown was accentuated big time by the news media.

1982 was worse than we have it today, much less the depression You are right though, the media has magnified this and has taken control of the moronic majority by manipulating what they think. In WWI, it took days to get news from the front. When Pearl Harbor was bombed in WWII it took almost 24 hours before most of mainland US heard about it. In Korea and vietnam, what was happening only had a 4-6 hour lag. In Gulf War 1, we got to watch smart bombs as they flew in to their targets. so just the acceleration alone of communication has contributed hugely to how much things are talked about, and how important they "feel", regardless of actual severity.

 

[Steve123]

1982 was worse than we have it today, much less the depression You are right though, the media has magnified this and has taken control of the moronic majority by manipulating what they think. In WWI, it took days to get news from the front. When Pearl Harbor was bombed in WWII it took almost 24 hours before most of mainland US heard about it. In Korea and vietnam, what was happening only had a 4-6 hour lag. In Gulf War 1, we got to watch smart bombs as they flew in to their targets. so just the acceleration alone of communication has contributed hugely to how much things are talked about, and how important they "feel", regardless of actual severity.

Exactly, now add that real time news capability to real time global equity, fixed income, futures and currency trading capability and see what you get

 

[Slayerxx]

Fuc% the government. They tax us 25-30% on our earnings, then 10% on what we buy then all other taxes especially homeowners tax that where I live can be anywhere from 4-9k a year!! All in all, half our money goes to taxes. Where the hell does all that go? To crooked politicians, lobbyists bs gov shit like space exploration wars overseas where if it were up to me, blow them up and take their shit...dont rebuild it for them and say.."oh, were sorry" after thousands of our sons and daughters died!! Im moving outta this country when my kid turns 18

 

[EasyEJL]

good luck finding someplace better

 

[thebrick]

In short, every economic crisis is different but the same on one level - the news media will always talk about the end of the world.

Agreed. I think people confuse the difference between things changing with the world ending. Since when in human history have things ever remained constant? With adversity comes opportunities for innovation and reinvention. Smart people recognize that. Just one example: the recession of the 70's, remember that one? Remember those credit card high double digit mortgage rates? During that same period two companies were founded that have been a part of a new revolution. MicroSoft and Apple. Ever heard of them?