The hard truth

[loosecannon]

Funny you should say this.

I just heard an economist who studied the buying patterns of the boomer generation in comparison to the WWII generation.

Know what she found?

That the boomer generation actually spent less money on decretionary items than their fathers.

SIGNFICANTLY less, actually.

Guess where they put their money?

Into shelter and paying off for things like health care, insurance and other things that are necessary.

Yeah, that's right...contrary to the myth that Americans have been foolishly spending their money on toys, the real fact is that as Americans purchasing power has declined, they've been spending their money mostly on ESSENTIALS, not on descretionary spending.

The myth that Americans are in trouble because of foolish spending is another of those BIG LIES brought to us by the apologists for the BIG MONEY that dominates our media, our government and our lives.

My generation was the best educated and the most hard working generation of the XXTH century.

And we started losing real purchasing power in about 1970 at just about the time most of us started our working careers, too.

We put our woman to work, we worked more hours, get better educations and went into DEBT just to keep going,

But even those financial strategies could not overcomethe decline in real purchasing power that has plagued the American working classes economy for the last 40 YEARS.

You kids simply have no idea how much easier it was to find a job that paid a living wage back in the 50s and 60s.

You truly have been fed a steady diet of nonsense about how every problem facing the American people is THEIR FAULT.

All this anecdoatal evidence that you've been exposed to is NOT supported by the real statistics about how people spend their dough.

People are spending their dough on "necessities" that weren't necessary in 1940. Like old age retirement, people just died, or healthcare, healthcare was cheap and people died anyway.

One thing is clear to me anyway is that the boomers had by far the most income and the most discretionary spending to show for their careers. Maybe not as a %, but as a total.

I knew a depression era dude who died wealthy (he owned an entire city block) a few years ago. But he didn't ever buy a new car until he was 82 yo.

 

[loosecannon]

Consumer demand isn't going to happen on any large scale until unemployment goes down, people have jobs and money to spend. And they won't start spending it on new home loans for quite some time as long as existing foreclosed properties can be bought for next to nothing. The whole future depends upon renewed consumer CONFIDENCE, and I can tell ya, we're going to be tippy-toeing for at least another couple of years. If I were in the market for a new home, I sure wouldn't be looking for a loan to build a new one, but I'd been looking around for a bargain at a historically low interest rate. So that's an indicator that new home construction will remain in the toilet for a long time.

A catch 22.

Not confidence, money to spend or credit is what will drive growth if when growth ever returns.

But in reality growth in the US economy may be stalled for a generation. In addition to our own national predicament we are also losing our global empire and economic clout on the world stage.

We have been living beyond our means since 1960 and that just won't be possible in the future.

 

[DiveCon]

sorry but the road toward the financial meltdown was a traffic jam populated by private financiers and politicians of both stripes.

this is true, but TneverM will only see it from one angle

And neither will boiedicca. The right is always innocent as a newborn and pure as the driven snow to her.

not so, i have seen her place blame on the GOP as well

 

[B. Kidd]

Republicans and Conservatives have been braying that since it's not raining gold coins on everyone..that everything that's been tried has been a failure. And this flies up against the face of facts. Never mind that before our current President even sat his ass down in the office the righty talking heads were proclaiming that if this man "succeeds" America "fails" or that "responsible" conservative congress people have been praying for a "Waterloo" to break the man..

They somehow have the right idea.

Well if the "right" idea is to make the Country ungovernable, and erect a small monied class of privateers that run the show..or Plutocracy..

That's no idea any true American should want any part of..

Timely word, Plutocracy, that is; because that is exactly what we are spinning towards.
We have an unprecedented concentration of income/wealth at the top; a record amount of 'secret money' flooding elections; a government raising its' taxes and reducing services for a growing angry and cynical public.

 

[MaggieMae]

Consumer demand isn't going to happen on any large scale until unemployment goes down, people have jobs and money to spend. And they won't start spending it on new home loans for quite some time as long as existing foreclosed properties can be bought for next to nothing. The whole future depends upon renewed consumer CONFIDENCE, and I can tell ya, we're going to be tippy-toeing for at least another couple of years. If I were in the market for a new home, I sure wouldn't be looking for a loan to build a new one, but I'd been looking around for a bargain at a historically low interest rate. So that's an indicator that new home construction will remain in the toilet for a long time.

A catch 22.

Not confidence, money to spend or credit is what will drive growth if when growth ever returns.

But in reality growth in the US economy may be stalled for a generation. In addition to our own national predicament we are also losing our global empire and economic clout on the world stage.

We have been living beyond our means since 1960 and that just won't be possible in the future.

I can't even remember where I heard this, some TV show, but it's probably true when you think about it. "In 1960, there was no such thing as public storage units. Fast forward to today, and there is over 25 billion square feet of outside storage, and renting those buildings is a booming business."

We've come to the point where we measure our wealth by our stuff, even stuff we don't need but can't bear to throw away.

 

[Sallow]

Republicans and Conservatives have been braying that since it's not raining gold coins on everyone..that everything that's been tried has been a failure. And this flies up against the face of facts. Never mind that before our current President even sat his ass down in the office the righty talking heads were proclaiming that if this man "succeeds" America "fails" or that "responsible" conservative congress people have been praying for a "Waterloo" to break the man..

They somehow have the right idea.

Well if the "right" idea is to make the Country ungovernable, and erect a small monied class of privateers that run the show..or Plutocracy..

That's no idea any true American should want any part of..

Timely word, Plutocracy, that is; because that is exactly what we are spinning towards.
We have an unprecedented concentration of income/wealth at the top; a record amount of 'secret money' flooding elections; a government raising its' taxes and reducing services for a growing angry and cynical public.

No disagreement here. And it won't end well if that's where we wind up.

 

[Flopper]

Our involvement in another "world" war won't help our economy much unless we're all ready to pitch in and sacrifice. WWII saw stay-at-home mothers going to work on assembly lines in munitions factories that had been converted from making all sorts of non-military equipment. People had jobs due to the war, and businesses saw profits from the war effort, which kept the economy flowing nicely in spite of the horrors of war. That's what Douger means. I can remember my own father returning from the war and unable to find work because there were thousands of other GIs looking for work at the same time, and by then the factory work was winding down. I remember him saying "We need another war" when he would get frustrated by not finding a job, not really understanding what he meant at the time. Now I do. But both the Iraq and Afghanistan wars have been nothing but costly no-win adventures, with no sacrifice except by our troops and their families and boosting the profits of mercenaries.

No, I don't think war would provide the spark needed. Today war is more of a drag on the economy because it runs up the deficit without producing a significant number of jobs.

As an economics professor once said, recession is the cost of business expansion in a free market economy. All economic expansions result in excesses which bring on recessions. A recession corrects excesses, increases productivity, and positions business for a new round of expansion.

Government can not create an economic recovery. It can only provide incentives for business to do so. Major corporations are once again raking in the profits and are sitting on a ton cash. They have cut back to a point that they can be profitable without increased sales. For big business to expand, they are going to have to see increased consumer demand which will only occur when banks start providing more loans to small business, home building, and home buyers. And that's not going to happen until they see a significant decrease in the 3 million foreclosures. This is going to take time, probably several years.

Consumer demand isn't going to happen on any large scale until unemployment goes down, people have jobs and money to spend. And they won't start spending it on new home loans for quite some time as long as existing foreclosed properties can be bought for next to nothing. The whole future depends upon renewed consumer CONFIDENCE, and I can tell ya, we're going to be tippy-toeing for at least another couple of years. If I were in the market for a new home, I sure wouldn't be looking for a loan to build a new one, but I'd been looking around for a bargain at a historically low interest rate. So that's an indicator that new home construction will remain in the toilet for a long time.

I agree.

I always find it remarkable that voters always hold the sitting president responsible for economic recovery as if the president could press the right buttons and prosperity would be here again.
Economist can never agree on the right course to take in a recession. Congress always pursues a political agenda that has little to do economic recovery. The Fed which probably has the most effective tools to deal with the recession acts independently from both the President and Congress.

 

[Flopper]

No, I don't think war would provide the spark needed. Today war is more of a drag on the economy because it runs up the deficit without producing a significant number of jobs.

great point

As an economics professor once said, recession is the cost of business expansion in a free market economy. All economic expansions result in excesses which bring on recessions. A recession corrects excesses, increases productivity, and positions business for a new round of expansion.

absolutely correct!

Government can not create an economic recovery. It can only provide incentives for business to do so.

ordinarily the feds can provide for recovery by allowing inflation to occur, assuming that inflation is the correction the economy requires.

But in deflationary traps you may well be correct. There may be nothing that can help.

BUT history does demonstrate that the full employment of total war has forced recoveries. So something that had that same effect could as well.

The Fed tries to walk the line between providing sufficient intervention without overdoing it and sending the economy in the wrong direction. Since it can be months before the effects of monetary changes take effect, their is no way to tell if they have intervened too much or too little.

The current situation is unusually. Interest rates which are usually their strongest tool, is not very effective since rates are so low. I noticed in the news that they have been buying treasury paper to increase the money supply. Hopefully, this is the right decision.

IMHO I think the Fed is right about 50% of the time and wrong about 50% of the time.