US Economy Headed for Toilet: Great Depression 2?

[selfAdjoint]

Here, courtesy of poster Ann on Brad de Long's blog, is a http://www.cepr.net/publications/debt_trends.htm . Whovever gets elected in November, he will be facing an economy headed for the toilet, and likely to drag the world economy down with it. Great Depression, second act?

 

[JohnDubYa]

Yes, the end of the world. Do you have any locust population trends?

 

[graphic7]

Yes, the end of the world. Do you have any locust population trends?

Is it just me or does anyone notice that whenever someone mentions something that *might* point towards Bush's direction, Dubya gets defensive?

The thing is, SelfAdjoint didn't even have to mention Bush, and Dubya became defensive.

 

[russ_watters]

SA, I'm confused by your title - are you happy about this?

In any case, I share JD's objection: you can't apply a trend to everything - especially something known to by cyclical. Consumer debt is high because interest rates are low. As interest rates rise, consumer debt will decrease. I'm not seeing a crisis here.

 

[russ_watters]

Is it just me or does anyone notice that whenever someone mentions something that *might* point towards Bush's direction, Dubya gets defensive?

The thing is, SelfAdjoint didn't even have to mention Bush, and Dubya became defensive.

Hmm... in fact, the only one so far to mention Bush is you...

 

[JohnDubYa]

Extrapolation is a nasty thing.

 

[graphic7]

If either of you had read the article, the first sentence mentions the "Bush Administration."

Not reading, and replying is a nasty thing, also.

 

[Ivan Seeking]

Yes, the end of the world. Do you have any locust population trends?

A mind is a terrible thing to waste.

 

[Smurf]

Here's a fun one: http://www.well.com/~sunbear/deficit.jpg

 

[graphic7]

Here's a fun one: http://www.well.com/~sunbear/deficit.jpg

Smurf, you better watch it. You'll get the republicans, Russ and Dubya all fired up.

 

[JohnDubYa]

Edit: Misread the timeline

 

[Smurf]

Damnit! now I am all wondering what he said =(

 

[graphic7]

He was going to say that the line was already in decline before Bush came in office.

 

[Gokul43201]

http://www.well.com/~sunbear/deficit.jpg

Hmmm...looks like every Republican President (with the exceptions of Nixon and Bush Jr., who converted surpluses into deficits) has, by the end of his term, nearly doubled the deficit he inherited. Among the Democrats, only Carter caused the deficit to increase - by about 25%. Johnson and Clinton converted deficits into surpluses.

Umm...just paraphrasing the data here, for those people unable to access that link for whatever reason. No political bias is intended.

 

[graphic7]

I wouldn't be suprised if I see an outcry from one of the republicans here for some sources of the data displayed in the image. That's what *always* happens..

 

[member 5645]

I started to reply, but this thread has already turned into cess pool. You people REALLY need to get off the partisan garbage. Before anyone even responds, there's already been multiple "Republicans..."
You think that is going to bait us in?? Or are you just trolling to do so?


EDIT - wait, all of the Republican bashing replies were due to Graphic7. When is this crap going to be cleaned up?

 

[selfAdjoint]

Oh you should add Gokul too, and while you're at it, add me; I think Bush is a disaster. But the deficit and the foreign debt is a bipartisan stupidity; Congress just waggled another unfunded tax cut^*, a "middle class" one that Bush will certainly sign, nd the Democrats had their noses in the trough right along with the Republicans.

And no, I am not happy to see another Great Depression threatening. I am one of the few posters here who can just remember the original; the joy of finding a dollar bill stuck under the upholstery of our couch, when we weren't going to have any money over the week-end till Daddy's (diminished) allotment check cleared. I live like that again now on Social Security, and people are saying the SS trust fund is the first place they'll look if the general fund comes up short, as it will, in a year or two.


^*Yes, I know they were really extending a tax cut that was up for rnewal, but they had two responsible choices: Let it die a decent death, or if they had to have it, fund it with other taxes.

 

[graphic7]

Excuse the bashing or rather the "trolling" some of you may call it, but I'm really sick of you people stating the economy was already in decline before Bush took office and that it was Clinton's fault.

The reason I'm bashing the republicans is simply you're the *only* ones that support Bush. How many democrats or liberals (they wouldn't be liberals or democrats then) support Bush? Not many I bet, therefore, I have to bash you.

And Phatmonky, perhaps you should get off some of that Bush propaganda, eh?

 

[JohnDubYa]

Excuse the bashing or rather the "trolling" some of you may call it, but I'm really sick of you people stating the economy was already in decline before Bush took office and that it was Clinton's fault.

They're just stating their opinions.

I am heading out. Over the last week we have had a new slur of posters and the arguments have really degenerated. It seems we have about six Adams in here now, and the forum is beginning to look like the Democratic Underground, complete with conspiracy theories in every thread. I don't even care that much. Kerry winning wouldn't be the end of the world for me, especially since it keeps you-know-who at bay for another four years.

 

[Gokul43201]

Oh you should add Gokul too, and while you're at it, add me; I think Bush is a disaster.

Hold your horses, mister ! (I mean, Supreme UberMentor)

While I share your "Bush is a disaster" sentiment, I won't go so far as drawing up generalized correlations from a National Deficit timeline. I was merely making a joke, while perhaps, at most, raising a suspicious eyebrow.

 

[Gokul43201]

And Phatmonky, perhaps you should get off some of that Bush propaganda, eh?

graphic7, I've heard (read) phatmonky (who is clearly a conservative) criticize Bush's economic policy, but haven't come across any Kerry criticisms from you (and surely there are at keast a few out there). If I'm wrong on this observation, ignore me, but it seems that perhaps, phatmonky may be far more objective on this issue than you think.

 

[graphic7]

Perhaps you're correct in phatmonky's aspect; I haven't read too many of his posts to know much about his policy. As for Kerry, in no way does Kerry have my full confidence, however, I do think he is the lesser of two evils. I've made one comment where I believe Kerry sways in his beliefs too much for me. Just my opinion, I guess you could say.

 

[member 5645]

Oh you should add Gokul too, and while you're at it, add me; I think Bush is a disaster. But the deficit and the foreign debt is a bipartisan stupidity; Congress just waggled another unfunded tax cut^*, a "middle class" one that Bush will certainly sign, nd the Democrats had their noses in the trough right along with the Republicans.

And no, I am not happy to see another Great Depression threatening. I am one of the few posters here who can just remember the original; the joy of finding a dollar bill stuck under the upholstery of our couch, when we weren't going to have any money over the week-end till Daddy's (diminished) allotment check cleared. I live like that again now on Social Security, and people are saying the SS trust fund is the first place they'll look if the general fund comes up short, as it will, in a year or two.


^*Yes, I know they were really extending a tax cut that was up for rnewal, but they had two responsible choices: Let it die a decent death, or if they had to have it, fund it with other taxes.

My problem isn't debating that Republicans are wrong. My problem is with the prejudice shown before I, or any other "right winger", get a chance to even reply.
Childish generalizations like "I wouldn't be suprised if I see an outcry from one of the republicans here for some sources of the data displayed in the image. That's what *always* happens.." before anyone even replies is pretty sad. It adds nothing to the conversation and really takes away my want, or hope, to have a real debate.
I'm just saying, let's try to drop the hyperbole and generalizations.

 

[member 5645]

Excuse the bashing or rather the "trolling" some of you may call it, but I'm really sick of you people stating the economy was already in decline before Bush took office and that it was Clinton's fault.

The reason I'm bashing the republicans is simply you're the *only* ones that support Bush. How many democrats or liberals (they wouldn't be liberals or democrats then) support Bush? Not many I bet, therefore, I have to bash you.

And Phatmonky, perhaps you should get off some of that Bush propaganda, eh?

I'm sick of not even having a chance to reply before I'm told what I think and WILL reply with.

Zell miller, an elected democrat, is one. Bashing isn't what this forum is about, so no, you DON'T have to bash me.

I haven't even had a chance to give an on-topic reply in this thread. How do you know what 'propaganda' I'm believing?

 

[russ_watters]

If either of you had read the article, the first sentence mentions the "Bush Administration."

Not reading, and replying is a nasty thing, also.

And the second sentence goes off in a completely different direction. The article was not about the federal budget deficit or the Bush admin.

Excuse the bashing or rather the "trolling" some of you may call it, but I'm really sick of you people stating the economy was already in decline before Bush took office and that it was Clinton's fault.

The economy was in decline before Bush took office. Check the numbers. But IMO, the president doesn't have a whole lot to do with that and even if he does, he doesn't affect it instantly. Sorry, graphic7, but either way, you can't have your cake and eat it too on this one.

But hey, anyone want to actually discuss the article? It was about consumer debt, not about Bush. Anyone...? Or is anti-Bush blustering all people really want to do in this forum?

 

[selfAdjoint]

Russ, I think you and Phat are whining over nothing. You seem to think that you can be snarky to liberals but if anybody comes back and uses your own tactics on you it's dirty pool. Wake up and smell the coffee! This board doesn't belong to right wingers or libertarians lone, anybody can come and post.

 

[Nereid]

It's the consequences of the current trends which are so unnerving ... a house-price bubble (aka real estate bubble) is what folk in the US, Australia, parts of the UK, ... are certainly experiencing. Unlike a stock market bubble (at least, in countries other than the US), a real estate bubble affects a majority directly ... and western economies have little experience dealing with these. Add the bubble to a job-less recovery, record low interest rates, and record foriegn debt, and the prognosis is ugly indeed.

The foreign debt thing could have truly awful global consequences, given the role of the US$ in world trade, and the importance of the US market (imports and exports) to trading nations (esp China). Add to that the fact that the RMB (Chinese currency) is pegged to the USD, that many central banks now hold humongous amounts of USD and US-Treasury backed securities, and you've got a brew of explosives.

Finding a goat (donkey? elephant?) to sacrifice for how we all got into the current mess may provide some emotional satisfaction, but won't do anything at all to stop the impending train wreck.

 

[russ_watters]

Russ, I think you and Phat are whining over nothing. You seem to think that you can be snarky to liberals but if anybody comes back and uses your own tactics on you it's dirty pool. Wake up and smell the coffee! This board doesn't belong to right wingers or libertarians lone, anybody can come and post.

?? Huh? You posted this thread - what was the point? I figured from the article that you posted it in order to discuss consumer debt. Was that your intent or not? If you intended this to be a Bush-bashing thread, not a discussion of an economic issue, then I misunderstood and graphic7 was correct in posting a Bush-bash in reply. By all means, continue and I'll get out of the way.

And also, if you ever see me using tactics like the ones I objected to (specifically, graphic7's post), by all means point them out to me. I have no desire to be a hypocrite.

 

[russ_watters]

If discussion of the paper, not just random Bush-bashing is the point, allow me to expand on my objection:

From figure 1, you can clearly see that household debt is cyclical in nature and depends on interest rates. But the extrapolation done is linear. That's simply an incorrect analysis of the data. From the caption:

While the ratio of debt to income is clearly far above prior peaks, and is rapidly headed higher, many analysts have noted that debt service payments are not especially onerous, due to fact that current interest rates are unusually low.

Its interesting to me that they note "prior peaks" (indicating that they know the data is cyclical) but then extrapolate linearly up from today.

I also think that there is a feedback effect here: the ratio is higher than other peaks and higher than you might expect by extrapolating interest rate vs peak because interest rates are so much lower than normal, people are putting extra effort into buying real estate right now.

Consumer debt is revolving and if it were much above normal, that would be a big problem - but it isn't.

I can't speak to much about the foreign debt issue though.

 

[kat]

It's the consequences of the current trends which are so unnerving ... a house-price bubble (aka real estate bubble) is what folk in the US, Australia, parts of the UK, ... are certainly experiencing. Unlike a stock market bubble (at least, in countries other than the US), a real estate bubble affects a majority directly ... and western economies have little experience dealing with these. Add the bubble to a job-less recovery, record low interest rates, and record foriegn debt, and the prognosis is ugly indeed.

Wrights Investor Service

On the positive side of the consumer balance sheet, U.S. household wealth grew 1.4% (11% year over year) to a record $46 trillion during the second quarter of 2004, according to the latest Fed statistics. Compared with end of 1999 levels, holdings of equities and mutual fund shares have shrunk by more than 20%, while real estate wealth has expanded by 50% or $5.5 trillion through the middle of 2004. Alan Greenspan maintains that there is no real estate bubble, and one certainly hopes the Fed chairman is correct. Still, it would seem prudent to expect real estate wealth to increase more slowly, if not shrink, as mortgage rates normalize over the coming five years.

Bankrate.com

Ever since the NASDAQ meltdown some folks have been waiting for the next big bad equity story. Since most equity is found in peoples' homes, that's where pundits have been focusing. They face disappointment however as they watch and wait for the "house-price bubble" to burst.

It's not going to happen -- there isn't one.

http://www.seacoastonline.com/news/09042004/biz_nati/35898.htm

"There is no national price bubble. Never has been; never will be," says David Lereah, chief economist for the National Association of Realtors. That leaves room for local housing bubbles, but Lereah sees no sure signs of those, either.

etc. etc. etc.