Who Should We Believe RE The Economy?

Discussion in 'Economy' started by Skull Pilot, Sep 17, 2008.

  1. Skull Pilot
    Offline

    Skull Pilot Platinum Member

    Joined:
    Nov 17, 2007
    Messages:
    31,694
    Thanks Received:
    4,478
    Trophy Points:
    1,130
    Ratings:
    +10,028
    Should we believe BHO, JSM or any other politician who has a vested interest in the economics of panic or do we believe people in the business of the economy?


    Now BHO says

    We have now lost jobs for five straight months – more than 320,000 since the beginning of this year. Last month we saw the biggest rise in the unemployment rate in more than twenty years. The percentage of homes in foreclosure and late mortgage payments is the highest since the Great Depression

    Or do we believe this

    Quit Doling Out That Bad-Economy Line

    Overall, the pessimists are up against an insurmountable reality: In the last reported quarter, the U.S. economy grew at an annual rate of 3.3 percent, adjusted for inflation. That's virtually the same as the 3.4 percent average growth rate since -- yes -- the Great Depression.


    when he said that the "percentage of homes in foreclosure and late mortgage payments is the highest since the Great Depression." At best, this statement is a good guess. To be really true, it would have to be heavily qualified with words such as "maybe" or "probably." According to economist David C. Wheelock of the Federal Reserve Bank of St. Louis, who has studied the history of mortgage markets for the Fed, "there are no consistent data on foreclosure or delinquency going all the way back to the Depression."

    Do we believe that the foreclosure rate is the highest it's ever been or do we believe:


    The Mortgage Bankers Association (MBA) database, which allows rigorous apples-to-apples comparisons, only goes back to 1979. It shows that today's delinquency rate is only a little higher than the level seen in 1985. As to the foreclosure rate, it was setting records for the day -- the highest since the Great Depression, one supposes -- in 1999, at the peak of the Clinton-era prosperity

    Even if Obama is right that the foreclosure rate is the worst since the Great Depression, it's spurious to evoke memories of that great national calamity when talking about today -- it's akin to equating a sore throat with stomach cancer. According to the MBA, 6.4 percent of mortgages are delinquent to some extent, and 2.75 percent are in foreclosure. During the Great Depression, according to Wheelock's research, more than 50 percent of home loans were in default

    Moreover, MBA data show that today's foreclosures are concentrated in that small fraction of U.S. homes financed by subprime mortgages. Such homes make up only 12 percent of all mortgages, yet account for 52 percent of foreclosures. This suggests that today's mortgage difficulties are probably a side effect of the otherwise happy fact that, over the past several years, millions of Americans of modest means have come to own their own homes for the first time.

    And how about this

    Here's another one not to be too alarmed about: Obama is flat-out wrong when he frets on his campaign Web site that "the personal savings rate is now the lowest it's been since the Great Depression." The latest rate, for the second quarter of 2008, is 2.6 percent -- higher than the 1.9 percent rate that prevailed in the last quarter of Bill Clinton's presidency.

    So who do we believe?
     
    Last edited: Sep 17, 2008
  2. Ravi
    Offline

    Ravi Diamond Member

    Joined:
    Feb 27, 2008
    Messages:
    81,329
    Thanks Received:
    12,694
    Trophy Points:
    2,205
    Location:
    Hating Hatters
    Ratings:
    +29,774
    How's your 401K doing?
     
  3. RetiredGySgt
    Offline

    RetiredGySgt Platinum Member

    Joined:
    May 6, 2007
    Messages:
    39,520
    Thanks Received:
    5,898
    Trophy Points:
    1,140
    Location:
    North Carolina
    Ratings:
    +8,931
    Deflection, the last resort of losers.
     
  4. Ravi
    Offline

    Ravi Diamond Member

    Joined:
    Feb 27, 2008
    Messages:
    81,329
    Thanks Received:
    12,694
    Trophy Points:
    2,205
    Location:
    Hating Hatters
    Ratings:
    +29,774
    It's not a deflection. When people get their September statements, McCain is going to have a hard time being believable on the economy.

    But you knew that already.
     
  5. Skull Pilot
    Offline

    Skull Pilot Platinum Member

    Joined:
    Nov 17, 2007
    Messages:
    31,694
    Thanks Received:
    4,478
    Trophy Points:
    1,130
    Ratings:
    +10,028
    took a bit of a hit like it did in 2000 when the tech bubble popped and then again after 9/11.

    But I try to pick funds with 10 plus years of history and morningstar ratings of 4 or 5 but i take some chances with lower rated funds too.

    i tend to pick a variety of sector funds rather than broad indexes. like these two fidelity fund that are in my retirement plan

    Fidelity Investments:

    which has managed modest gains even this year. and has a life time return of better than 12%


    http://personal.fidelity.com/products/funds/mfl_frame.shtml?316390475
    positive 7% this year life time average of 15%

    sure some of my funds have tanked but I'll keep buying them because they have a long history of doing well.
     
    Last edited: Sep 17, 2008
  6. AllieBaba
    Offline

    AllieBaba BANNED

    Joined:
    Oct 2, 2007
    Messages:
    33,778
    Thanks Received:
    3,648
    Trophy Points:
    0
    Ratings:
    +3,650
    You believe the economists, who say this was bound to happen, and who state the current mess come directly from Congress (read, democrats) who insisted that mortgages be more widely available to poorer people, and who deemed it a good idea to prevent the lenders from making any money on the loans.

    It's not rocket science. You cripple the people with the money, you force them to take risks which they wouldn't ordinarily, and you determine that they can't make any money on those risks, and this is what happens. Also, Obama's economic advisor was instrumental in the collapse of Fannie Mae (and this is off CNN, folks).

    Financial advisors are saying to leave 401Ks alone, unless you need them sometime in the next 10 years, because regardless of the drop in their vals now
     
  7. Chris
    Offline

    Chris Gold Member

    Joined:
    May 30, 2008
    Messages:
    23,154
    Thanks Received:
    1,958
    Trophy Points:
    205
    Location:
    Virginia
    Ratings:
    +2,089
    Republican Congress for 6 of the last 8 years plus a Republican president. Republicans deregulated the market which is the cause of the crash.

    Republicans are screwing you with high oil prices, market crashes, and the war in Iraq, and you don't even know it.
     
  8. Skull Pilot
    Offline

    Skull Pilot Platinum Member

    Joined:
    Nov 17, 2007
    Messages:
    31,694
    Thanks Received:
    4,478
    Trophy Points:
    1,130
    Ratings:
    +10,028
    So are you saying that we should believe BHO even though as the article i used clearly states his positions are at best unsupportable?
     
  9. Ravi
    Offline

    Ravi Diamond Member

    Joined:
    Feb 27, 2008
    Messages:
    81,329
    Thanks Received:
    12,694
    Trophy Points:
    2,205
    Location:
    Hating Hatters
    Ratings:
    +29,774
    I have fidelity as well, not exactly a 401K, but similar. I like it because it does have a good long-term record, but I'm really glad I don't need to touch it now--especially the kids' college funds. I don't know how all these investment and insurance failures are going to affect it though, and that's the real reason the market should have some regulation. Everything is all so intertwined. I understand the insurance company failure might even affect money market accounts...
     
  10. Ravi
    Offline

    Ravi Diamond Member

    Joined:
    Feb 27, 2008
    Messages:
    81,329
    Thanks Received:
    12,694
    Trophy Points:
    2,205
    Location:
    Hating Hatters
    Ratings:
    +29,774
    Says the twinkie that lives off the gubment. lol! AllieBooba, the problems with the housing market began when the IMF needed a place to invest, and they invested in American real estate, to the detriment of us all.
     

Share This Page