How screwed are we?

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Im not an economist, and I know very little about how the economy works; however, I hear more and more people getting worried about it and so Id like to know just how bad is it? Is it expected to get worse, are we at the worst part of it right now? What can be done to get it back up? Are we printing too much money and making the dollar have almost no value anymore? When the US dollar goes below that of mexico, will lou dobbs be out of a job when all the mexicans cross back into mexico?

Ok, last one was a joke. :tongue2:

It seems like everything is going to India or China, and on top of that things are not looking good at home, and houses are losing value left and right.
 
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  • #2
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As far as I can tell, the only real sector of the economy that the US can possibly have now is innovation, both in information, science, and technology. Oops, we're not giving that as much interest as other parts of the world.

Things like manufacturing are going over seas, like you pointed out. The US doesn't have much left it can do.
 
  • #3
OmCheeto
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As far as I can tell, the only real sector of the economy that the US can possibly have now is innovation, both in information, science, and technology. Oops, we're not giving that as much interest as other parts of the world.

Things like manufacturing are going over seas, like you pointed out. The US doesn't have much left it can do.
A German company recently invested a bit of $$ in our town. I calculate that for their $100 million dollar investment, the finished product will bring in $1 billion dollars a year. I think it's just a matter of keeping up with what the world wants to buy. God knows the Chinese have figured that out.

Cyrus said:
....and houses are losing value left and right.
Might be referred to as a "correction", but I haven't studied economics in 25 years.
 
  • #4
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The Mexican are moving to Canada.:rolleyes:

Never mind the jobs Americans don't do.
A new Tucson business, playing off the state's new employer-sanctions law, is linking Mexican workers here with high-paying jobs that Canadians aren't doing.
Canada's labor shortage has created a unique opportunity that a recently opened Tucson business is capitalizing on.
http://www.azstarnet.com/sn/border/229617 [Broken]
 
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  • #5
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More than 2.2 million.

That was the number of foreclosure filings, which included default notices, auction sale notices and bank repossessions, in the U.S. in 2007, according to RealtyTrac, an online real estate service. The filings involved about 1.3 million properties, a 75 percent jump from the previous year. The company also reported that foreclosure activity in February was up 60 percent from last year's figures.

http://www.tradingmarkets.com/.site/news/Stock%20News/1236154/ [Broken]

This is way past the point of being called a correction. Corrections affect mostly the markets, this situation is affecting millions of individual people.

A lot of people bought more house than they could afford from lenders who were eager to close a deal. Overall the situation has now brought down the price of homes to a point that most anyone who bought a home in the last three years now owes more on the home than it is worth.

The only exceptions are people who made large down payments and they are in the minority.
 
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  • #6
OmCheeto
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More than 2.2 million.

That was the number of foreclosure filings, which included default notices, auction sale notices and bank repossessions, in the U.S. in 2007, according to RealtyTrac, an online real estate service. The filings involved about 1.3 million properties, a 75 percent jump from the previous year. The company also reported that foreclosure activity in February was up 60 percent from last year's figures.

http://www.tradingmarkets.com/.site/news/Stock%20News/1236154/ [Broken]

This is way past the point of being called a correction......
Some guy in that article you just posted disagrees:

http://www.tradingmarkets.com/.site/news/Stock%20News/1236154/ [Broken]
"In some cases, it is a correction needing to work its course," Mihajlov said. "Most rational people would observe that the growth we experienced could not continue, that home prices could not keep rising at exponential levels and that eventually supply would outpace demand.

"All of this has happened, and now three factors have come together that rarely occur at the same time: historically low interest rates for 15-, 20- and 30-year, fixed-rate mortgages; falling home prices; and motivated sellers. It's really one of the best times in history to buy a home."
And his friend also had some hopeful words at the end:

Dresel
"We have great interest rates to work with right now, and we just need people to recognize that," Dresel said. "The weather also needs to break. Our market can get red-hot when it's nice, bright and sunny.

"I wish I had a crystal ball, and I certainly don't have a hard and fast date, but the (industry) will probably bottom out this summer. I think people are going to look at this market right now as the time to buy. People will say, 'I should've bought back then.' "
Nice to hear a couple of positive comments amidst all the doom and gloom.
 
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  • #7
russ_watters
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I hear more and more people getting worried about it and so Id like to know just how bad is it?
It is so bad that we're almost certain to be in a recession. :uhh:

This recession is likely to be about as bad as the last one, maybe a little worse - which means most people won't actually notice it affecting them. The housing market and the financials that funded it account for virtually all of the slowdown. There are, of course, secondary effects (construction workers spending less at WalMart), but so far, the rest of the economy really looks ok.
Is it expected to get worse, are we at the worst part of it right now?
It is likely to get worse for at least a few more months.
What can be done to get it back up?
It's a cycle. Wait 6 months.
Are we printing too much money and making the dollar have almost no value anymore?
Probably, though "almost no value" is an exaggeration.
When the US dollar goes below that of mexico, will lou dobbs be out of a job when all the mexicans cross back into mexico?
Just to make sure you understand, a Peso doesn't buy you in Mexico what a dollar buys you here. Currencies don't work that way. The actual conversion factor doesn't mean anything.
It seems like everything is going to India or China, and on top of that things are not looking good at home, and houses are losing value left and right.
Housing prices are cyclical as well. Since we just had the biggest bull housing market in history, we were bound to have a crash. It shouldn't have come as much of a surprise, though the trigger did catch people offguard (though they usually do - that's kinda the definition of "irrational exhuberence").
 
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  • #8
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Are the housing prices and the housing market expect to go back up anytime soon?
 
  • #9
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Are the housing prices and the housing market expect to go back up anytime soon?
If inflation hits, expect prices to go up again. Maybe not in real terms, but certainly in absolute terms (which is all you care about if your house is highly leveraged like with most people).
 
  • #10
russ_watters
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Are the housing prices and the housing market expect to go back up anytime soon?
Because of the current glut of supply, it could be a year before housing prices show any serious signs of recovery. There are probably people who would like to sell who are holding back because of the downturn. As the glut starts to move, more will be put up for sale, keeping prices down.
 
  • #11
russ_watters
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If inflation hits, expect prices to go up again. Maybe not in real terms, but certainly in absolute terms (which is all you care about if your house is highly leveraged like with most people).
My mother's recommendation to me when I bought mine 2 years ago was that if you can handle the stress of stretching yourself thin to afford a new house, and survive the first few years, it'll be worth it down the road. That's a gamble and a burden for sure if you have, say, $2,000 a month in income and a $1,000 a month mortgage, but in five years, a $3,000 a month income with still a $1,000 a month mortgage is much easier to handle.

Now the added risk that I (and a lot of others) took is with an adjustable rate mortgage. But with limits on how high the rate can go and an expectation of refinancing or moving in 5 years anyway, that's not that much of a risk either.
 
  • #12
turbo
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One of the things that is most troubling to me (apart from the decline of the dollar and the erosion of the interest rates on my savings caused the by the Fed's constant intervention to prop up Wall Street) is that we have lost much of our manufacturing sector. Part of having a solid economy depends on the health of business in which value is added during manufacturing processes. Much of the heavy manufacturing left in the country is in support of the military, which is hardly conducive to free competition and efficiency. For instance, if the Navy wants to expand its fleet of high-tech guided-missile cruisers, they are pretty much limited to Bath Iron Works in Maine and Ingalls in Mississippi. You want a commercial tanker or cargo ship built? You'll probably end up shopping in Korea.
 
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  • #13
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I really was dissapointed that the US government bought a bunch of Air-trash instead of Boing aircraft.
 
  • #14
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Apparently the Boing aircraft are too bouncy.

Still, they could have at least gone with Boeing. I mean, on one end you have people in the government (Congress and President, right?) clamoring for US-made stuff and domestic products, and on the other you have the Pentagon going "Nah, we'll just go to Wal Mart."

I mean, they both fall under "the government", you'd think they would have talked to each other, right?
 
  • #15
russ_watters
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Boeing has an order backlock of a quarter trillion dollars. They'll be fine. And it sounds like the main reason they lost that contract was arrogance.
 
  • #16
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I know china bought a lot of jets from boeing a while ago.
 
  • #17
drankin
Yep, they probably thought they had that one in the bag. Boeing needs to realize that they have to actually compete to get contracts. That's a lot of dimes. Some heads should roll over this one. I'm not sure how it works with military hardware being made over-seas though, doesn't seem in the countries best interest.
 
  • #18
BobG
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Im not an economist, and I know very little about how the economy works; however, I hear more and more people getting worried about it and so Id like to know just how bad is it? Is it expected to get worse, are we at the worst part of it right now? What can be done to get it back up? Are we printing too much money and making the dollar have almost no value anymore? When the US dollar goes below that of mexico, will lou dobbs be out of a job when all the mexicans cross back into mexico?

Ok, last one was a joke. :tongue2:

It seems like everything is going to India or China, and on top of that things are not looking good at home, and houses are losing value left and right.
Sending jobs to India and China have some downsides that go with the savings. There's a compromise in between. Why outsource jobs to India or China when you can outsource them to North Dakota? Or Alabama? Or Chatanooga? The savings aren't as great, but they are substantial and you avoid a lot of the negatives of exporting jobs to foreign countries.

And, sure, it's hard for a programmer to adjust from a California lifestyle to a North Dakota lifestyle, but less pay isn't as bad as it sounds if you're moving to an area with a lower cost of living (unless you have to sell your house before you move, I guess). And people in North Dakota know what a lifestyle is - they have a good education system and just about everyone there can look the word up in the dictionary.

Actually, I see two changes. International competition will surely slow economic opportunities for Americans, but it won't eliminate them. Even in America, you'll see a more level distribution of wealth between regions ...... which means it's hard to get ahead in the old big cities while there's lots of economic opportunities for individuals in smaller cities. (Just look at that list of the best cities in America that CNN Money did for 2006 - they had to add a best big city category since none of the top 100 ranked in the top 50 in population. And the best big cities were the smaller towns in the top 50 population wise.)

Economic diffusion is the trend, whether nationally or globally.
 
  • #19
russ_watters
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Are the housing prices and the housing market expect to go back up anytime soon?
You asked this question at the right time.
Home prices across the USA continued their dizzying free fall, posting record drops in some of the largest metro areas in a sign that no major market is being spared by the national housing crisis...

At the same time, falling prices could help stabilize the market, he says, by drawing in new buyers....

"I wouldn't be looking for a pattern of improvement until April, May or June," he said.
http://www.usatoday.com/money/economy/housing/2008-03-25-sp-home-prices-january_N.htm
Home sales posted their largest increase in a year in February as prices finally fell enough to lure reluctant buyers back into the market.
http://www.usatoday.com/money/economy/housing/2008-03-24-home-sales-february_N.htm

So the push-pull of supply, demand, and price has finally caused housing sales to begin to increase. If the trend continues and we've really hit the bottom of the sales numbers, the increase in demand will, in a few months, begin to stabilize the prices.
 
  • #20
russ_watters
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Yep, they probably thought they had that one in the bag. Boeing needs to realize that they have to actually compete to get contracts. That's a lot of dimes. Some heads should roll over this one. I'm not sure how it works with military hardware being made over-seas though, doesn't seem in the countries best interest.
Plenty of heads did roll and some of those heads may be headed to jail. The Air Force and Boeing conspired to rig the bid and when they won the rigged bid, Congress (led by John McCain) torpedoed the deal and made them rebid it.

http://www.commondreams.org/headlines04/0328-09.htm [Broken]

Every now and then, bullies need a good slap upside the head to remind them that they aren't God. This is a healthy thing for Boeing.
 
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  • #21
Gokul43201
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Can't agree more with Russ on the Boeing issue.

Back to the original question though: what happens to the credit crunch that we're getting into? Will that problem fix itself anytime soon? Will it take more cuts from the Fed? Or will Fed rate cuts not really alleviate lending woes?
 
  • #22
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  • #23
Ivan Seeking
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Can't agree more with Russ on the Boeing issue.
They are also getting rid of the gray-hairs and outsourcing production to China and abroad. Only a bit of assembly will be done in the US.
 
  • #24
BobG
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The average home value in Detroit is $22,000. That's down 54% since last year. Detroit has become the purple lots on the Monopoly board...

http://online.wsj.com/article/SB120640573882561087.html?mod=googlenews_wsj

So, if you live in a city, your home is worth $60 Monopoly dollars.
Home prices in Detroit aren't because of the current mortgage mess. With population declining in most of the cities around the Eastern Great Lakes, there wouldn't be much of a market, anyway.

So, yeah, if you live in Detroit, Buffalo, Akron-Canton, etc ....... they almost have to invent a new color even cheaper than purple.
 
  • #25
turbo
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Can't agree more with Russ on the Boeing issue.

Back to the original question though: what happens to the credit crunch that we're getting into? Will that problem fix itself anytime soon? Will it take more cuts from the Fed? Or will Fed rate cuts not really alleviate lending woes?
The Fed's rate cuts are penalizing those of us who have saved a nest-egg and are trying to keep a reasonable portion of our savings liquid. It is impossible to find a reasonable interest rate on money-market accounts these days, because the Fed is keeping money so cheap. It would be nice if I could just print my own, like the government can. Instead, I watch the value of my dollars dwindle while interest rates fall into the cellar.

The Fed is propping up speculators while stabbing conservative savers like me in the neck.
 

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