How to stop Recession & advice to Mr Bernake'''

Discussion in 'Members' Club Room' started by bomber, Sep 17, 2009.

  1. daveman
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    daveman New Member

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    I'm always surprised at how Americans can find the time to worry about the so called problems in China when back at home, the fire is already burning at America's behind.
     
  2. Schumacher
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    Schumacher Senior Member

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    Why should my writing something good be surprising. ?:)

    @Ambivalent
    I picked some of your points. It's true as you say US household savings are increasing which in itself is good but many make the mistake of equating household savings with total savings which also include government & corporations savings. Increase in household savings have been more than offset by government budget deficits & losses at corporations due to the recession. So with total savings down, the US is even less able to fund investments now than before the recession.
    Ultimately, the choice have to be made between goodies like super duper carriers, foreign occupations among other things versus standard of living.
     
  3. pla101prc
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    pla101prc Senior Member

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    the choices will be a lil harder than a few carriers and foreign occupation i am afraid. health care is actually a major aspect, 16% of the GDP isnt something you joke around with lol. problem now is that obama right now is prolly willing to sign anything brought forward by the congress, i am not sure if it will make the situation better or worse...prolly worse.
     
  4. Schumacher
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    Schumacher Senior Member

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    To be fair, not only Americans but just a dark side of human nature everywhere to sometimes seek comfort in misfortune, real or made up, of others.
    I'm more surprised with many widely quoted so-called experts out there who continue to stick their heads in the sand and doubt China's growth figures despite even foreign figures from government to fortune500 confirming the growth trend in China.
    Of course the latest we hear is even firms in Dongguan & Yiwu are now once again complaining of difficulty in finding workers with business turning up. Contrast this with the so-called 'jobless recovery' we hear in other countries.
    Well, 'jobless recovery' is just another way of saying a major chunk of the stimulus has gone to the pockets of CEOs instead of creating jobs. :D
     
  5. KYli
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    KYli Junior Member

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    The Wealth of Nations is a very boring book, and I probably would never have finished reading it. However, I will give it another try, but if I ever accomplished this impossible task. It is only fair I read Karl Marx Capital which is even more difficult to read and Keynes The General Theory of Employment, interest and Money also, because we shouldn't have missed the opportunity to compare the three greatest economists.

    We have monopolies, natural or legal monopolies.

    As for the oligopolies, I would say that maybe Marx is right about one thing in the capitalism market that is the size of business firms will steadily increase as the consequence of the recurrent crises that rack the economy.

    As a side point, I don't like the way the government bailout the banks, and the banks took these opportunities to become bigger. It might undermines the competition, and the government will surely not allow the biggest banks to fail because they are too big to fail.


    I was taught to never trust the bank, and never be indebted.:D

    Actually I do, in the late forty of China or Zimbabwe of today both countries have to deal with hyperinflation. When there are excess numberous of loans or money flowing a particular country, there would be consequence.

    The Fed didn't pubish all the information they used to, so we have no way to know what really happening. As for species, I never support it, and I think you are trying to explain these to the participants in this topic. So I won't comment more on it.


    The government lent money or invested into the banks, and the majority of these money are expecting to be paid back at least in the theory except maybe AIG, Fannie and Freddie. However, you are advocating throwing money at bad home mortgages directly:confused:, and the money would not be retrieved. One simple question I would ask, how should we determined what mortgages are good and what mortgages are bad. As you might know, one of the reasons why this crisis is so damaging was because the banks were cleverly invented many special packages to share risks, CDS. Secondly, there are many people who supposed not owed the home they are living in because they can't afford it, how to deal with though people. Even more , everyone want the government to help their mortgage, how can government acts fairly, responsibly, and effective to what bad mortgage they are going to bailout and forgive. We are talking about trillion dollars hard currency here.

    Are you saying you want to resolve this crisis comparably with Japan, China, and sweden deal with their banks debt problems? I might support this resolution, if the banks are willing to give up a big chunk of their shares.
    Few years back I told my dad not to buy a house, but now I regret it. Because my prediction is off by few years, the collapse of housing market happened until late 2006. From where I lived the houses are expensive as ever, If only I knew how long it took and not all the bubble can be pop. Sad.

    China will float its' currency eventually, but the free float of Yuan would only happen at their time table. Of course China might drag their feet, but I would predict it would happen sooner rather than later.

    I agreed with you that it is the best interests for everybody to avoid governemnt intervention, however, don't underestimate the US government wishes to maintain a strong dollar. As much as you might think otherwise, US government have artificially wanted a strong dollar throughout 90 and until now, as strong dollar is essential for US to maintain their dominated powers. Dollar stands for USA, so superficial US might be rattling and claimed unfair trade advantage but the truth is US have no intention to give up a strong dollar(world reserved currency) position yet.
     
    #25 KYli, Sep 21, 2009
    Last edited: Sep 21, 2009
  6. pla101prc
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    pla101prc Senior Member

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    the US has been pursuing the strong dollar policy since the 70s when they abandoned the gold standard. that played a big role in reducing the competitiveness of US industries. it simply made gambling in the financial sector easier and more profitable then actually sitting down and producing things. they have no one else to blame but themselves in that one,nobody forced them, they made a bad choice.
     
  7. tphuang
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    tphuang Brigadier
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    actually, US has been pursuing a very weak dollar policy since Bush came to power. How can you be pursuing a strong dollar policy when you keep your interest rate as low as they did. As for why US industries are less competitive, there are a lot of reason. Too much regulation, corporate tax being too high, paying health care coverage that's too high, education system in America isn't where it should be. Of course, there is also the limited market policy of Asian countries. China is everyone's favourite whipping boy, but Japan has been at it for much much longer. Japan just never figured out that keeping their currency artificially low to support export is not necessarily a good thing.

    As for what made gambling in financial sector easier, it's not a by-product of a strong dollar policy. It's a by-product of the Fed working with the big banks and willing to rescue the banks regardless of what they do. So, now that they have an implied guarantee, they are willing to take any kind of risks they want. The problem was that starting from the dot-com bubble, they never allowed a recession for political reasons, so they kept on inflating the bubble by having this super low interest rate. Banks knew that whenever they got in trouble, Greenspan would lower the rates to the point where they can borrow a lot of money really cheaply, so they can do whatever they want. Capitalism is not capitalism if you have certain players that can't loose no matter what kind of choices they make.

    this is a joke right?

    again, when has the US gov't been purusing strong dollar policies in the recent year? A strong currency is a good thing, because then you have a greater wealth and have greater purchasing power.

    Think about it this way. If dollar looses half of its value right now and real GDP of american looses 25% in value and same goes with defense budget. Do you think they'd be able to buy the same amount of military equipments?

    i think it went up from negative to 6 to 8%, but now it rolled back a little bit because of things like the cash for clunker program. But I think the failure of that program shows the main problem in driving economy through spending. Currently, the manufacturing and production industry in America is not all that strong, so programs put in to encourage consumption are not consuming products made in America. So in the long run, this really is not sustainable. The problem is that in order to fix problems in America, people have to be willing to take extreme pain for a couple of years and no one wants to do that. You may have noticed that the trading deficit went down when America's savings rate went up.

    Here is the thing to think about. In the past, America's national debt went up due to wars. And most importantly, they were borrowing from their own citizen's savings. Now, America's debt is going up to increase borrowing and consumption. It's going up to support all the gov't entitlement programs and such. So whereas they used to be able to bring down debt by ending the war. Now, they can't bring down the debt, because they can't suffer the public backlash off ending these programs, reducing budget. Also, they have to print or borrow from foreign countries because Americans are all tapped out of savings.
     
  8. KYli
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    KYli Junior Member

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    You don't get the hint:rofl:.
    Of course, if it was not in their interests, why should they do it in the first place. But everything have a cost, US government might have underestimated the consequences and problems of artificially strong dollars. Even if a strong dollars is beneficial, they might have been too confidence and overlook the negative side effects.

    Even though US government might not want to lose half of dollars value, but it does not mean they couldn't make assaults against some currencies especially Yuan. Think about it, if US government allowed Dollars to be devauluated with all currencies, the negative consequences outweight the positvie, but if they could force a few countries to comply with their wishes. The US government would gain advantages.
     
  9. pla101prc
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    pla101prc Senior Member

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    US gov has always pushed for a strong dollar policy, if the dollar weakens by too much, foreign investors will withdraw from the US and find refuge elsewhere, that will be detrimental to the US economy
     
  10. SteelBird
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    SteelBird Major

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    First of all, he had a wrong spelling, or I could have googled to find out what "Bernanke" means. Secondly, I'm from the other side of the ocean, and not so interested in US politics. Finally, this guy doesn't always show up on foreign (outside the US) media. If his did show up on the news, it always come to me in Chinese or Khmer language. :coffee:
     

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