Let's Talk Politics and the Economy...(basically an essay)

[Wall St. Peon]

Hello, especially to those who I actually know...

It's been a while since I've been here, but I have a bit more time (sort of), and I've been wanting to get into a wide-arcing debate/discussion about the economic and political state of the US. I'm sure we'll spread into the global economy as well, since everything is interconnected. If you're bored or uninterested already, just press the back button now.

First off, let's start with the economy. The US is currently in a full-blown recession (it's been around six months of economic downturn). The subprime housing crisis is the root of this all, and atrocious risk management at all the major Wall Street firms (including my own employer) has caused multi-billion dollar write downs and the failure of a firm that is nearly 100 years old. Not only that, but the firms (especially my own) have raised capital from sovereign wealth funds, essentially giving partial ownership of US companies to China and other Asian/Middle Eastern countries. The bailout of Bear Stearns raised the ire of the general population due to a 30 billion dollar bailout by the fed; they're screaming that the fed needs to stop bailing out Wall Street and start helping "Main Street."

On the surface, it does look like the fed is coddling big Wall Street firms who are not technically banks, which means the fed should not be helping them out. In reality, if Bear Stearns had failed, Lehman Brothers would have followed, then Citi, then Merrill Lynch, then Goldman Sachs...you get the idea. If Bear Stearns had failed, what little faith stockholders have in those companies would have totally eroded and there would have been a mass selling of those companies' stocks. If that had happened, Wall Street would have toppled into the abyss.

The subprime mortgages that started this whole mess should never have happened. Borrowers lied on their applications and counted on non-guaranteed raises and bonuses in order to get houses that they couldn't afford. Those same houses were over-appraised which drove up the amount of money loaned to begin with in order to pad the mortgage brokers' pockets, as well as the real estate agents and investors. And then there's the mortgage brokers who have committed huge amounts of fraud...but that's another issue.

If you don't understand why the Wall Street firms are hurting and why this is effecting the global economy, here's what happened. Borrower A takes out a subprime loan from a bank. The bank sells the mortgage to another bank or investment firm which puts it together with other like mortgages. Investor A borrows $1000m from Japan at 0% interest and puts it in a basic money market account in the US at 5% interest. He then sees that he can have an 8% return on this grouping of mortgages, so he takes the money out of the money market (safest place to put money) and buys the mortgage group.

Collectively, mortgage groups are typically safe - it's what Fannie Mae's done since its inception. If one mortgage defaults, it's no big deal as there's 10 others in the group to pick up the slack. What happened was the subprime mortgages were given to people who couldn't afford them and they began to be delinquent on their loans and the interest payments weren't being made to the investors. The investors weren't getting interest payments, so they couldn't pay back the borrowed money. Since the interest wasn't being paid, the rating of the CDO dropped and no one would buy it - it's now too speculative. It wasn't just US companies who invested in these risky securities - investors all over the world put their money into US CDOs. Do you see why this is a problem?

This is and will effect the global economy. US Citizens are clamoring for help so they don't lose their homes, and politicians are giving "solutions," especially with this being an election year.

I'm not a Republican (independents represent!!), but I will not vote for either of the Democratic candidates because they're both liberal fascists. Their economic solutions will only precipitate the American arrogance and feelings of entitlement and push the country closer to a socialist government. Both Hillary Clinton and Barack Obama's plans shift all of the fault from the borrowers to the lenders and the debt from the borrowers and lenders to the tax payer. Their solution only tells the American people that they can borrow as much money as they want, even if they have no intention or way to pay it back, and everyone else will foot the bill.

In regards to the housing, I totally agree with John McCain. His first comment was essentially that the government should not bail out irresponsible lenders and borrowers. His new stance is better, and he actually outlines a plan as opposed to just throwing money at it. I can outline all of the above if you want, but you can find all of their plans (and lack thereof: read Obama) on CNN or wherever.

For those of you who think this will be a moot point by the time anyone is elected, they're wrong. This will go well into 2009, as there is something about ready to break. Everyone knows it's coming, but they don't know what it is or where it will be. Such an event will have a cataclysmic effect on the world economy and all of our lives.

Your thoughts? We'll see where this goes.

[benji]

liberal fascists

Stop reading the dissertation stealing Jewberg.

Johm McCain is only slightly less of a moralistic totalitarian. At least his foreign and economic policies do not entirely ignore human history. Although I wouldn't trust him, ever.

[puttincomputers]

The US is currently in a full-blown recession (it's been around six months of economic downturn).
um actually the definition of recession is -

The National Bureau of Economic Research formally defines a recession as three consecutive quarters of falling real gross domestic product. http://financial-dictionary.thefreedictionary.com/recession

i agree with most of what you say.
i think its time for a 3rd party though

[cyanide]

I wouldn't mind benji being US president and Mr Shane as Vice-President, but that's just me.

I'm more interested in the investing aspects of the US. Those companies you listed, Goldman Sachs, Merrill Lynch, etc. are all mutual fund investment companies. Those companies may have been around forever, but given I invest money on them in the short term, I may have outstanding returns, but after ten years, I'd probably lose all my money. My point is, they're bound to take hard hits, but whether or not it would create a chain reaction, I have no idea. I have no idea if the US is merely in a recession or heading toward another depression, but if I was investing, I wouldn't put money into mutual funds.

[Matthew]

I wouldn't mind benji being US president and Mr Shane as Vice-President, but that's just me.

Thank god you don't vote then.

[Sauru]

I wouldn't mind benji being US president and Mr Shane as Vice-President, but that's just me.

Thank god you don't vote then.

i second this lol. then again, i would vote benji before any of the current candidates

[benji]

The online gambling bill with be repealed. I will sign a signing statement to not enforce it within the first week!

There is no reward without risk! No, they can't! More change than you can shake a stick at! Cynicism and street justice we can believe in!

[Wall St. Peon]

Stop reading the dissertation stealing Jewberg.

Actually, if you're referring to the book, I haven't read it - I came across it somewhere and used my noggin...

Johm McCain is only slightly less of a moralistic totalitarian. At least his foreign and economic policies do not entirely ignore human history. Although I wouldn't trust him, ever.

I don't trust any of the candidates; none of them truly understand foreign policy or the economy. I simply prefer McCain because he doesn't bail out stupid homeowners and he at least has come to grips that pulling out of Iraq at this point in time would only create another terrorist islamic nation like Afghanistan.

The US is currently in a full-blown recession (it's been around six months of economic downturn).
um actually the definition of recession is -
Quote:
The National Bureau of Economic Research formally defines a recession as three consecutive quarters of falling real gross domestic product. http://financial-dictionary.thefreedict ... /recession

Yeah, I know it's three consecutive quarters of falling real gdp - that's why I said we're in one because we're really going on around six. The people that declare "recession" are always about a quarter or more behind.

I'm not asking for agreement, I'm asking for thoughts.

I think its time for a 3rd party though

I agree, but it'll never happen.

I wouldn't mind benji being US president and Mr Shane as Vice-President, but that's just me.

Why?

'm more interested in the investing aspects of the US. Those companies you listed, Goldman Sachs, Merrill Lynch, etc. are all mutual fund investment companies.

Actually, they do a lot more than that. I work on the retail side of one of those (Global Wealth Management), and we specialize in investing money for individuals, IRAs, business, municipalities, and government. This is buying and selling securities. If people chose to, they can invest in mutual funds through Blackrock, Vanguard, etc, but Merrill is not a mutual fund company, and neither is Goldman. There's a number of different divisions within each company.

Those companies may have been around forever, but given I invest money on them in the short term, I may have outstanding returns, but after ten years, I'd probably lose all my money. My point is, they're bound to take hard hits, but whether or not it would create a chain reaction, I have no idea. I have no idea if the US is merely in a recession or heading toward another depression, but if I was investing, I wouldn't put money into mutual funds.

This is not official advice to anyone, just personal opinion. If you want to invest money in the short term, a money market is the safest bet. Typically, the stock market goes in three year cycles, and it has for a number of years. Mutual funds and index funds are the safest places to put your money outside of a money market. If you want to invest for a long time, then you buy a mutual fund or index fund, as these are collections of securities managed by a company like Vanguard or Blackrock - the stocks doing well even out the stocks doing bad for a good return.

The US is on the verge of a depression. There will be another incident of the magnitude of Bear Stearns this year - it may be a major corporation folding, it may be a hedge fund going bankrupt - it could be a number of things, but it will happen and it may be cataclysmic. Stagflation is close to, if not currently, happening and it will only get worse as the idiocy of the fed reducing rates will only draw up the prices of oil and thus the prices of everything.

[benji]

Since when is slowed growth a recession? Did this happen the same time a reduction in the rate of growth of spending became a cut?

The American economy has never been as stable as the last 20 years. The Panics and Depressions of the past came out of volatile economies, not ones that drift gradually between 0-7% growth. A true epic cataclysm is the only thing that will shake today's economies. The world was barely shaken by the soft corrections and the Asian market collapse. I doubt one corporation failing would be that event.

If we are on the verge of depression there is nothing that can save us. The result will be epic government control of the economy, President Obama would declare an end to "faith in free markets", pass a new Smoot-Hawley and usher in more fascism of the New Deal type. There would not be a Supreme Court to turn back the NRA this time.

In other words, I long since stopped trusting predictions of the apocalypse. When the Depression that's been predicted for 30 years happens the same day the sea swallows New York, I'll concede it. Until then, I'll go back to supporting the establishment of an apathetic authoritarian cat-run state.

[Wall St. Peon]

I (and many others) am calling this a recession due to the fact that the economy is growing at a much slower rate than projected, and shrinking in some areas, unemployment is rising, staflation is on the horizon if it isn't already here, and things will only get worse in the coming months. Will we enter an out and out depression? That remains to be seen.

The stock market is extremely volatile, and I feel that our economy as a whole is volatile as well. As for one corporation failing causing a depression? It almost happened. If Bear Stearns had failed, stockholders would have sold all their stock in the large financial companies and wall street would have failed and completely destroyed the financial industry - that's why the fed did what they did. It's not like Bear Stearns is Krispy Kreme...if GE or IBM went belly-up, you don't think that wouldn't affect the world economy in a drastic way?

If we are on the verge of a depression nothing will save us, you're right. The fed is only postponing the inevitable by slashing interest rates - the free market works because of things like this and to try to prevent them will only make the eventual end result, a recession or depression, that much more painful.

And you're right: if a democrat, especially Obama, is elected, he would do something like what you describe. Whether or not you were serious doesn't matter - Obama is frightening.

I agree; I don't trust most predictions, but this isn't like most predictions. I'm not saying that there's a definite depression on the horizon; I'm saying there will be something that will correct the economy, and it will be very painful for a lot of people. This terrifies me, as all of the candidates (especially the democratic candidates) for president don't understand what is currently going on and will only exacerbate the current situation.

Hrm...apparently no one else has any opinions. That makes me sad...

[benji]

The NLSC is argument-adverse. It's called "fighting." You're supposed to just come in, post your opinion and not respond to anyone.

stockholders would have sold all their stock in the large financial companies and wall street would have failed and completely destroyed the financial industry

I cannot fathom this happening. Enron didn't cause a collapse of the "companies selling intangible goods" market. Even WorldCom was a minor blip in the long run. Same with the Dot-Com collapse.

Unemployment rising is hardly a crisis, same with a slowing growth rate. The argument for a coming crisis pre-supposes a structual flaw in the economy.

Of course there will be an economic correction, every decade needs one. But if the last few are any indication, it will be a soft landing, not a structural collapse.

All politicans only have one response to anything: more government control. They can't be seen as helping if they don't do anything. Politicans aren't elected to leave us alone, they're elected to help and manage us.

[Wall St. Peon]

Fair enough, but if Bear had not been saved and the stockholders had lost all of their money, I think that would have forced a lot of people who were already panicking to sell any of their other financial stocks. Enron is a poor example, as that was corporate fraud, not poor risk management.

Of course, those issues by themselves are not a crisis. However, those coupled with a lot of unknowns in the future, as well as stagflation, suggest that there will be a correction/"crisis" in the next few months (sorry, correction perhaps would have been a better term to use all along...). There is a structural flaw in the economy: the fed messing with interest rates is simply extending the time before such a correction will happen and then is making things worse by weakening the dollar and increasing prices.

I think it will be a soft landing as long whoever ends up being the president doesn't being to further regulate the economy. I think that's what makes me think that something like this is near: Bush is a proven failure, the democrats are essentially evil, and McCain...McCain might be OK, but he probably won't be. Depending on who they pick as cabinet, we may be alright, or we may not.

All politicans only have one response to anything: more government control. They can't be seen as helping if they don't do anything. Politicans aren't elected to leave us alone, they're elected to help and manage us.

That's the problem. In regards to the economy, the less the government control, the better. If the government begins to help out irresponsible citizens, institutes global health care that won't work, and add more and more social programs that create an even greater welfare state, then the US will continue to slip in almost all facets of the economy and as a nation. We will be come even more lazy, arrogant, and entitled and every little mistake will expected to be handled by the government and not those truly responsible.

If I can get my wife to go along with it, I'll transfer to a London branch once I'm fully licensed...

[Matthew]

Hrm...apparently no one else has any opinions. That makes me sad...

Or maybe nobody gives a fuck about your predictions? If I made a thread saying "it might be sunny tomorrow" would you post in it?

[Wall St. Peon]

Or maybe nobody gives a fuck about your predictions? If I made a thread saying "it might be sunny tomorrow" would you post in it?

Forgive me for wanting to talk about something that actually effects people more than sports. This and "It might be sunny tomorrow" do not even compare in any such way. Forgive me for trying to create an environment of discussion on issues that should matter to a lot of people. It's apathetic uneducated ignorant fools like you that will destroy the US. Granted, you're in Aussieland, but there's far too many people like you and worse in the US.

Nice to see you still have ssues with someone who rarely posts. I could give two shits about what you have to say because obviously you haven't let go of some deep seeded issue you have with me. It's half-wits like you who have been around this board for ages yet have not grown up one bit that makes me not want to take the time to post here. What are you now, about 24, 25 yet you have no interest in anything outside of being an immature fuckwit? Wake up, walk outside, and realize that the world is bigger than your dark room with its computer. Yeah, yeah, you play basketball...so do a lot of people who post on this board and a lot of people who don't.

[Donatello]

Hrm...apparently no one else has any opinions. That makes me sad...

Or maybe nobody gives a fuck about your predictions? If I made a thread saying "it might be sunny tomorrow" would you post in it?

Maybe he wouldn't post in it, but he also probably wouldn't bash you about it either.

( On subject, I must be honest and say I am honestly ignorant on the subject and prefer to not think about it in most cases. I also recognize that this is irresponsible. )

[cyanide]

I wouldn't mind benji being US president and Mr Shane as Vice-President, but that's just me.

Why?

Well, you both are really into politics... ah forget it, it seems only benji got it that I was kidding around. By the way, ignore Matthew. He only posts when he wants to attack people for no reason, yet he's immune to being banned because of, ha, politics!

This is not official advice to anyone, just personal opinion. If you want to invest money in the short term, a money market is the safest bet. Typically, the stock market goes in three year cycles, and it has for a number of years. Mutual funds and index funds are the safest places to put your money outside of a money market. If you want to invest for a long time, then you buy a mutual fund or index fund, as these are collections of securities managed by a company like Vanguard or Blackrock - the stocks doing well even out the stocks doing bad for a good return.

I agree with all the statements, except for a long term mutual fund, unless Peter Lynch is managing it. I wouldn't feel comfortable having others invest my money when they're taking the same risk, research and speculation that I could make on my own. But that's just my opinion.

[Matt]

What i find most fascinating is that the whole industry seemed to have aborted proper credit evaluations.....which is amazing because an ADI will lose money, if just 1 out of 100 housing loans defaults.

[Jackal]

Forgive me for wanting to talk about something that actually effects people more than sports.

Kind of measuring with two sticks there, now aren't you fella? You ask to be forgiven about wanting to talk about something you care about...yet are "surprised" that people who aren't interested in talking about it...don't. So you're allowed to...but the ones that don't want to...make you sad. Okay.

Maybe he wouldn't post in it, but he also probably wouldn't bash you about it either.

Perhaps he wouldn't...everyone is busy with book deals these days. But that's besides the point. If someone is going to go ahead and get sad about others not wanting to discuss a topic they want to discuss, reactions such as the one above aren't really that surprising. I had the same thought...maybe a lot of others also did. Sorry for not being a pseudo philosopher about something that doesn't interest me.

As you mentioned Shane, a lot of us don't live in the US so the topic doesn't speak to us. Still you felt sad that we don't talk about it, confusing.

He only posts when he wants to attack people for no reason, yet he's immune to being banned because of, ha, politics!

That's a strong, strong generalization of Matthew. It borders ignorance, if anything else. To say that's only when he posts...a lot of stuff that is taken for granted now days is because of those "politics". But okay...that's how it works, a lot of stuff is forgotten.

Anyways, I'll get off Matthew's dick (come on, you all thought it)...carry on with your very meaningful discussion and you enlightened ones continue to feel sad about the ones that really don't give two shits about the topic.

[puttincomputers]

I (and many others) am calling this a recession due to the fact that the economy is growing at a much slower rate than projected, and shrinking in some areas, unemployment is rising, staflation is on the horizon if it isn't already here, and things will only get worse in the coming months. Will we enter an out and out depression? That remains to be seen.

The stock market is extremely volatile, and I feel that our economy as a whole is volatile as well. As for one corporation failing causing a depression? It almost happened. If Bear Stearns had failed, stockholders would have sold all their stock in the large financial companies and wall street would have failed and completely destroyed the financial industry - that's why the fed did what they did. It's not like Bear Stearns is Krispy Kreme...if GE or IBM went belly-up, you don't think that wouldn't affect the world economy in a drastic way?

If we are on the verge of a depression nothing will save us, you're right. The fed is only postponing the inevitable by slashing interest rates - the free market works because of things like this and to try to prevent them will only make the eventual end result, a recession or depression, that much more painful.

And you're right: if a democrat, especially Obama, is elected, he would do something like what you describe. Whether or not you were serious doesn't matter - Obama is frightening.

I agree; I don't trust most predictions, but this isn't like most predictions. I'm not saying that there's a definite depression on the horizon; I'm saying there will be something that will correct the economy, and it will be very painful for a lot of people. This terrifies me, as all of the candidates (especially the democratic candidates) for president don't understand what is currently going on and will only exacerbate the current situation.

Hrm...apparently no one else has any opinions. That makes me sad...

so were we in a recession under clinton? the unemployment rate is still lower then it ever was under clinton.
gdp declining? get your facts straight! http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
gdp declining would be a disaster? again get your facts straight.
http://en.wikipedia.org/wiki/List_of_co ... P_(nominal)
according to this page if you do basic math you wil have to come to the conlcussion that even if the us gdp would be cut in half the us would still be the second highest on the gdp list!

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[Matthew]

Or maybe nobody gives a fuck about your predictions? If I made a thread saying "it might be sunny tomorrow" would you post in it?

Forgive me for wanting to talk about something that actually effects people more than sports. This and "It might be sunny tomorrow" do not even compare in any such way. Forgive me for trying to create an environment of discussion on issues that should matter to a lot of people. It's apathetic uneducated ignorant fools like you that will destroy the US. Granted, you're in Aussieland, but there's far too many people like you and worse in the US.

Nice to see you still have ssues with someone who rarely posts. I could give two shits about what you have to say because obviously you haven't let go of some deep seeded issue you have with me. It's half-wits like you who have been around this board for ages yet have not grown up one bit that makes me not want to take the time to post here. What are you now, about 24, 25 yet you have no interest in anything outside of being an immature fuckwit? Wake up, walk outside, and realize that the world is bigger than your dark room with its computer. Yeah, yeah, you play basketball...so do a lot of people who post on this board and a lot of people who don't.

I didn't say anything about our "history". You said "no one else has any opinions" (which is a generalisation, just because they don't share their opinions with you doesn't mean they don't have any) and then you get all butthurt because I give you a possible explanation as to why.

I love it. Plus you go on some random tirade about me having some deep seeded issue with you, but lets compare posts.

Mine:

Or maybe nobody gives a fuck about your predictions? If I made a thread saying "it might be sunny tomorrow" would you post in it?

Yours:

Forgive me for wanting to talk about something that actually effects people more than sports. This and "It might be sunny tomorrow" do not even compare in any such way. Forgive me for trying to create an environment of discussion on issues that should matter to a lot of people. It's apathetic uneducated ignorant fools like you that will destroy the US. Granted, you're in Aussieland, but there's far too many people like you and worse in the US.

Nice to see you still have ssues with someone who rarely posts. I could give two shits about what you have to say because obviously you haven't let go of some deep seeded issue you have with me. It's half-wits like you who have been around this board for ages yet have not grown up one bit that makes me not want to take the time to post here. What are you now, about 24, 25 yet you have no interest in anything outside of being an immature fuckwit? Wake up, walk outside, and realize that the world is bigger than your dark room with its computer. Yeah, yeah, you play basketball...so do a lot of people who post on this board and a lot of people who don't.

Who has the deep seeded issues again?

But there's one thing I have to point out. You say "I could give two shits about what you have to say", which means nothing to me, but if this was true why would you write a 500 word response to one sentence I wrote?


SHANE HEFTY FOR VP!!!

hahaha

[The X]

Whilst I do believe that a slowing US economy and potential recession will no doubt effect the rest of the World's economy, as it already has, the trickle down effect is only just beginning. We'll probably see UK get hit before we (Australia) get hit. I envision the Australian economy starting to slowdown later this year (in about 4-6 months time). We will likely see negative growth after that time & potentially a recession down the line. Australia is rich in mineral resources and with the growing markets (ie. China & India) craving those commodities, I think, as it has done in the past, the economy can withstand the global downturn a little better & without the effects being as profound as in the States. I think the US slowdown/potential recession will also have longer lasting effects than here in Australia.

[[Q]]

The US is on the verge of a depression.

I don't know if that and gas prices are related, but damn... gas prices around here are almost $4/gallon. Granted, it isn't anything like what it's like overseas, but it shouldn't be like this in the US. Hell, I even remember 8 or 9 years ago, prices were down to $0.99/gallon.

[Wall St. Peon]

What i find most fascinating is that the whole industry seemed to have aborted proper credit evaluations.....which is amazing because an ADI will lose money, if just 1 out of 100 housing loans defaults.

Well, it's not so much that they aborted proper credit evaluations, it's that they gave loans to people with bad credit with loans/credit on rediculous terms. They saw that someone was a risk, and they saw dollar signs with the high interest they could charge.

Kind of measuring with two sticks there, now aren't you fella? You ask to be forgiven about wanting to talk about something you care about...yet are "surprised" that people who aren't interested in talking about it...don't. So you're allowed to...but the ones that don't want to...make you sad. Okay.

Not really. I said this in my first post:

If you're bored or uninterested already, just press the back button now.

I said that to defer comments like Matthew's and yours (well, yours kind of). I wanted to keep this a discussion about the topic. I assumed the intelligence level of the board had gone up since I had last posted, as the ones who remained from way back when should be more mature, intelligent, and interested in the world. It turns out I was wrong.

Perhaps he wouldn't...everyone is busy with book deals these days. But that's besides the point. If someone is going to go ahead and get sad about others not wanting to discuss a topic they want to discuss, reactions such as the one above aren't really that surprising. I had the same thought...maybe a lot of others also did. Sorry for not being a pseudo philosopher about something that doesn't interest me.

Again, see the first full paragraph of the post. Was the book deal comment referring to me? I didn't even bring that up, and that was two or three years ago now. If it doesn't interest, then leave it alone. Don't post. I see tons of posts on here that don't interest me, and guess what I do? I don't post. I leave it alone. I let people that want to have the discussions have the discussions. I don't butt in and throw in my two cents just to be a prick.

As you mentioned Shane, a lot of us don't live in the US so the topic doesn't speak to us. Still you felt sad that we don't talk about it, confusing.

It's a global issue, really. If anything, non-US dwellers should know more about it than the American people - the world news is much more informative. The US economy is strongly tied to the world economy, so large slumps in the US will eventually trickle down/up to all the other world economies. You should be concerned.

so were we in a recession under clinton? the unemployment rate is still lower then it ever was under clinton.
gdp declining? get your facts straight! http://www.bea.gov/newsreleases/nationa ... elease.htm
gdp declining would be a disaster? again get your facts straight.
http://en.wikipedia.org/wiki/List_of_co ... P_(nominal)
according to this page if you do basic math you wil have to come to the conlcussion that even if the us gdp would be cut in half the us would still be the second highest on the gdp list!

Do you work in the finance industry, have a degree in economics, or know anything about the economy aside from what you found on Google and Wikipedia? Here's an excerpt from the website you provided:

Corporate Profits

Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) decreased $52.9 billion in the fourth quarter, compared with a decrease of
$20.5 billion in the third quarter. The fourth-quarter profits estimates reflect large adjustments that
raised profits in the national income and product accounts (NIPAs) relative to profits as reported in
corporate financial source data in order to account for differences in the treatment of asset write-downs
and loan-loss provisions, which are not expensed in current-production profits in the NIPAs (see
Technical Note).

Current-production cash flow (net cash flow with inventory valuation and capital consumption
adjustments) -- the internal funds available to corporations for investment -- decreased $55.7 billion in
the fourth quarter, compared with a decrease of $21.1 billion in the third.

Taxes on corporate income decreased $15.0 billion in the fourth quarter, compared with a
decrease of $20.7 billion in the third. Profits after tax with inventory valuation and capital consumption
adjustments decreased $37.9 billion in the fourth quarter, in contrast to an increase of $0.3 billion in the
third. Dividends increased $21.7 billion, compared with an increase of $23.5 billion; current-production
undistributed profits decreased $59.5 billion, compared with a decrease of $23.3 billion.

Domestic profits of financial corporations decreased $74.4 billion in the fourth quarter, compared
with a decrease of $32.5 billion in the third. Domestic profits of nonfinancial corporations decreased
$34.3 billion in the fourth quarter, compared with a decrease of $14.4 billion in the third. In the fourth
quarter, real gross value added of nonfinancial corporations increased, and profits per unit of real
product decreased. The decrease in unit profits reflected increases in both the unit labor and nonlabor
costs corporations incurred that were partly offset by an increase in unit prices.

Hmmm...that's two consecutive quarters of decreased profits of over $100 billion in two quarters. Guess what? There were huge corporate losses in the first quarter of this year, and I believe the second quarter of last year also recorded losses. That's the economy retracting. Do you live in the US? Unemployment is increasing. Citi is laying off something like 40,000 employees, Merrill 4000. That's two companies and around 50,000 people. They aren't the only ones. If people don't have jobs, they don't buy things. If they don't buy things, companies don't make money. Do you see where I'm going with this?

Laughing I didn't say anything about our "history". You said "no one else has any opinions" (which is a generalisation, just because they don't share their opinions with you doesn't mean they don't have any) and then you get all butthurt because I give you a possible explanation as to why.

The only person getting "butthurt" is Psycho_Jackal who admitted to being on your dick...

That's a generalization? Thank you! If you hadn't pointed that out, I never would have known what I was doing! Your possible explanation was exactly the type of post that I wanted to avoid: juvenile, ignorant, arrogant, and prickish. I wanted a discussion, not a debate over semantics and and whether or not people should care; if they don't care, then they don't post, simple as that. You don't care, don't post.

As for our history, every time I post - no matter what it's about - you attack me. And we go through this same thing every time. Who starts it every time? You.

My "long" post in response to your one sentence is simply saying that you're ruining my discussion. I don't care what you say, and I don't care about your trite and insecure comments. What irks me is that you turned a potentially serious and enlightening debate into nothing more than a flame war.

Andrew, why is Matthew on the staff of this board? Because he's been around for 10 years? He's certainly not contributing to a welcoming environment that facilities intelligent discussion. Apparently, he does this all the time (which he always has), judging by cyanide's post...

Now back to the discussion...

Whilst I do believe that a slowing US economy and potential recession will no doubt effect the rest of the World's economy, as it already has, the trickle down effect is only just beginning. We'll probably see UK get hit before we (Australia) get hit. I envision the Australian economy starting to slowdown later this year (in about 4-6 months time). We will likely see negative growth after that time & potentially a recession down the line. Australia is rich in mineral resources and with the growing markets (ie. China & India) craving those commodities, I think, as it has done in the past, the economy can withstand the global downturn a little better & without the effects being as profound as in the States. I think the US slowdown/potential recession will also have longer lasting effects than here in Australia.

Well put. I still contend that we are well into a recession here in the US, and it will only spread. I think Japan may be impacted next (they already have a bit), and then the UK. It's already started in Europe, in the financial sector (Credit Suisse and others with large write-downs).

I don't know if that and gas prices are related, but damn... gas prices around here are almost $4/gallon. Granted, it isn't anything like what it's like overseas, but it shouldn't be like this in the US. Hell, I even remember 8 or 9 years ago, prices were down to $0.99/gallon.

You can thank the Fed for the gas prices. When they lowered the rates of the Fed Fund rate (overnight borrowing to banks) to increase the amount of money banks could, in turn, lend to customers, they increased inflation. Put that together with the oil stockpiling the US government is doing, and that is going to jack up the price of oil to it's $115 a barrel. This is also affecting prices of groceries and other things, like fed ex and ups rates, as well as airline ticket prices. High gas prices mean higher overhead, and combine that with a falling currency, and we have stagflation occurring.

California's probably been hit the hardest, and you're in Newport Beach (you are in Cali, right?). I'm in Iowa - it's been pretty mild here, aside from the drop in property value that happened everywhere. Are there tons of abandoned houses there?

[The X]

Well put. I still contend that we are well into a recession here in the US, and it will only spread. I think Japan may be impacted next (they already have a bit), and then the UK. It's already started in Europe, in the financial sector (Credit Suisse and others with large write-downs).

yeah, I have no doubt you guys are well on your way to a recession....I'm starting to see signs in day-to-day work life that we are heading that way too....one of my clients, a clothing retailer, usually runs on about a $50,000 net profit before depreciation per quarter....this quarter, they had a $60,000 loss....one of the first things that goes when recession hits is the discretionary spending on items like clothing and entertainment....another tiling client I have has seen the big jobs ($500,000-$1m) slow down immensely in the last 6-8 months....with cost of borrowing quite high here (variable interest rates on home loans are a shade about 9%, so business loan rates are even higher), you can see the writing on the wall....I guess the good thing in the accountancy/business services line of work is that there is work for us whether the economy is good or bad, probably one of reasons I'm in it, so not bad from my side....although I never like to see clients struggling....we help where we can....

all that being said, it's going to be interesting to see how it all pans out....there is still a lot of confidence over here, which is good....I just can't believe our dollar is worth almost as much as yours....you don't have to go back too many years & we'd only get 50 US cents to the Aussie dollar....I guess that says as much for how strong our economy has been to how average the US one has been....

[[Q]]

California's probably been hit the hardest, and you're in Newport Beach (you are in Cali, right?). I'm in Iowa - it's been pretty mild here, aside from the drop in property value that happened everywhere. Are there tons of abandoned houses there?

Nope. Orange County is still pretty crazy as far as housing goes. I think you'll find more abandoned houses out in less desirable areas to live, like in the desert. I tihnk there will always be a high demand for housing in Southern California, especially in the coastal cities. I heard Henderson, Nevada (outside of Vegas) used to be a hot spot for people to live 3-4 years ago, but most the houses they built are all empty now.