Economy not going to recover any time soon...

[Sofiyya 1,687]

Execute the greedy Kapitalists, then we'll be out of this mess!

Yea! Let's start with the guy who signs your paycheck.

Reported to FBI.

Reality sux, eh?

[mRx 16]

Execute the greedy Kapitalists, then we'll be out of this mess!

Yea! Let's start with the guy who signs your paycheck.

Reported to FBI.

Reality sux, eh?

Eh? Are you married to Marc?

[spookyturtle 9,466]

Execute the greedy Kapitalists, then we'll be out of this mess!

Yea! Let's start with the guy who signs your paycheck.

Reported to FBI.

Reality sux, eh?

Eh? Are you married to Marc?

[mRx 16]

Yet that raises an interesting question: Why would we think that a debt-to-income ratio of 100% is sustainable? Well, for one thing, the economy has ostensibly evolved since the 1950s, and even since the 1980s. Advancements like securitized lending seem to have created a system where interest rates are lower and consumers are able to shoulder more debt than they once did.

I don't buy that about securitized lending forcing rates lower; It definitely decreased the risk on the lender's part but the downward pushing of the Federal funds rate that's progressed since the 1980s, is responsible for the lowered interest rates. It also helps explain the higher aggregate d/i ratio. When lending rates are low, saving rates are also low--which discourages savings and encourages borrowing.

In my opinion, piling up debt is the best hedge against inflation, as dollars borrowed yesterday are more valuable than those same dollars repayed today.

[dalegg 143]

Obama will fix it once he takes office

That won't happen until he proves he's a citizen.

[mawilson 2,133]

In my opinion, piling up debt is the best hedge against inflation, as dollars borrowed yesterday are more valuable than those same dollars repayed today.

Ironic, isn't it?

[jundp 191]

Execute the greedy Kapitalists, then we'll be out of this mess!

Yea! Let's start with the guy who signs your paycheck.

Reported to FBI.

Thank you, Matt, for making me choke on my morning coffee

I guess there must be something seriously wrong with me because I honestly am not hurting from the economy. I've had to cut back on a few 'luxuries' but this (so far) hasn't been devastating. Our kids' school tuition went up some and my district instituted a salary freeze, but P's job hasn't been affected (so far) and we don't have tons of debt...

Am I feeling falsely secure?

[scandal 951]

Execute the greedy Kapitalists, then we'll be out of this mess!

Yea! Let's start with the guy who signs your paycheck.

Reported to FBI.

Thank you, Matt, for making me choke on my morning coffee

I guess there must be something seriously wrong with me because I honestly am not hurting from the economy. I've had to cut back on a few 'luxuries' but this (so far) hasn't been devastating. Our kids' school tuition went up some and my district instituted a salary freeze, but P's job hasn't been affected (so far) and we don't have tons of debt...

Am I feeling falsely secure?

You have a job. That makes all the difference. So long as you live within your means and your employment is stable you have no reason to be feeling the pain.

It's an issue of statistics. Many people have either lost jobs or fear losing them. For them, this is very real and very painful. But most Americans are employed and not in that predicament.

[SuperDuper! 230]

What exactly has that (nonsensical) comment got to do with the reasons behind the mess? Carefree attitude bullshit.

Carefree is the way to be! Being uptight aint alright!

Obama will fix it once he takes office

That won't happen until he proves he's a citizen.

The Supremes already gave him a pass on that one. Sorry for the news flash.

[rebeccajo 14]

Execute the greedy Kapitalists, then we'll be out of this mess!

Yea! Let's start with the guy who signs your paycheck.

Reported to FBI.

Thank you, Matt, for making me choke on my morning coffee

I guess there must be something seriously wrong with me because I honestly am not hurting from the economy. I've had to cut back on a few 'luxuries' but this (so far) hasn't been devastating. Our kids' school tuition went up some and my district instituted a salary freeze, but P's job hasn't been affected (so far) and we don't have tons of debt...

Am I feeling falsely secure?

You have a job. That makes all the difference. So long as you live within your means and your employment is stable you have no reason to be feeling the pain.

It's an issue of statistics. Many people have either lost jobs or fear losing them. For them, this is very real and very painful. But most Americans are employed and not in that predicament.

If you could pay all your expenses on the wages of the person in your household earning the lowest salary, or if you have enough money saved to pay those expenses for several months, then you can probably feel secure.

Remember that those expenses go beyond paying your mortgage and other debt. They include keeping the lights and heat on, buying groceries, paying insurance on the car you drive to that one remaining job and the house you live in, putting gas in the car and paying for any needed medications.

Edited June 14, 2009 by rebeccajo

[mRx 16]

Am I feeling falsely secure?

Not falsely secured, per se.

Basically, what is happening now is that we have not experienced the effects of the newly created money yet (the stimuli bills and big bank capital injections).

In order for the money to be injected into the economy, it has to be lent by the banks. When the banks lend it, it officially creates to inflation that raises prices that everyone is worried about, But, the banks are terrified, and are not lending it out.

The recent cliff dive on this graph taken from the Fed website illustrates this fact that banks aren't lending. They're depositing the newly injected credit right back into the Federal Reserve (at a loss).

If they are somehow compelled to lend, then the devastation on our economy will commence. But as long as the banks refuse to lend, then our prices can deflate will realistic levels, and our economy will recover.

It's a ticking time bomb that can be diffused if the wrong policies aren't enacted.