JUDGMENT CALLS

Recovery Killer?

How lower prices could actually hurt the economy.

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  • Posted By: tomjen @ 11/26/2008 4:03:49 PM

    RE: RO in RENO
    "If anytime recently you bought some screws only to have your power driver rip their little heads off you know what I'm talking about, in short you can no longer get a good screw in this country. And regardless of the purchase price it was a waste of money."

    I had to really laugh at this comment "in short you can no longer get a good screw in this country." Because in all actuality...that is exactly what we are getting in this country!!!

  • Posted By: RO in Reno @ 11/10/2008 9:18:46 PM

    Lower prices have already done immeasurable damage to the economy. While you might be able to buy some small kitchen appliance for less than you could when it was made in the USA, the useful life is so much shorter and you will find yourself buying three or four over the same life span of the one you used to have.
    The problem is along with the lower prices of Chinese goods came a significant loss in quality that is evident in literally every product.

    The US has a substantial volume of standards that once dictated minimum quality of just about everything. It???s called the ASTM. American Standards of Testing Materials.
    It is still used to determine the quality of materials that go into the construction of commercial buildings other wise it is no longer used.
    Once it dictated and was used to control the quality of the chair you are sitting that had a tag that said ???made in compliance with ASTM something or the other??? and the screws you bought to hang a picture once had the same notice on larger packaging.

    If anytime recently you bought some screws only to have your power driver rip their little heads off you know what I'm talking about, in short you can no longer get a good screw in this country. And regardless of the purchase price it was a waste of money.

    The trade agreements have to be amended to dictate the minimum quality acceptable of literally every product to be shipped into this country.
    Right off we would have a surge in the testing lab business that would employ hundreds if not thousands of people.
    The products shipped into the country would be sampled right at the docks for testing to insure they meet the standards, meaning of course every shipping container would have default inspection for the Homeland security people who seem unable to accomplish it otherwise. It would put American manufactures on a level playing field with foreign goods, and Americans can compete if the products are equal. The lower wages in China are offset by shipping and brokerage fees.

    And we would be able to get a good screw at the local hardware store. Who knows perhaps we could even buy dog food that did not kill the dog.

    • Posted By: tomjen @ 11/26/2008 4:00:48 PM

      RE: RO in RENO
      "If anytime recently you bought some screws only to have your power driver rip their little heads off you know what I'm talking about, in short you can no longer get a good screw in this country. And regardless of the purchase price it was a waste of money."

      I had to really laugh at this comment "in short you can no longer get a good screw in this country." Because in all actuality...that is exactly what we are getting in this country!!!

  • Posted By: OnlyCure=Truth @ 11/13/2008 3:17:29 AM

    ???Only banks can loan money they don???t have and charge interest for it. Because the elite who own
    the banks made it a policy that the bank can loan 10 dollars for every 1 it actually has.
    That is what created the current financial mess or as they say problem with liquidity.
    They created the problem by loaning money they did not even have to loan.
    Dishonest usury is what it is.

    Full disclosure of banking policies would be nice lets have it all put on the table for every one to
    see just how corrupt they are taking food and housing from people who work hard while they sit
    in there penthouses reading about bank bailout's. No don???t feel sorry for them feel sorry for the
    people who are being crushed under there feet from the dishonest usury.

    Most people had to give a down payment before 2004 for a home and if you where considered
    risky you had to give a bigger down payment.
    For example
    on a loan of 180,000 with medium to low risk you would fork out 7000.00 to buy a home.

    Now what does that translate into for the bank.
    The banks can loan 10 dollars for every 1 dollar they have and charge interest for the loan.
    win - win for the bank
    1 = 10 for them right off plus interest
    7000 = 70,0000 plus interest
    then you have a payment of 750.00 or so with interest on the loan
    750.00 = 7500.00 plus interest per month as you pay in for them
    1 year of payments = 90,000 plus interest for them to loan to others.
    so if you put 7000.00 down and finance 180,000.00 they get repaid in one year with a payment of
    750.00
    Sounds strange but remember 1 dollar is as good as ten to them for every dollar they take in they
    can loan 10
    So don???t feel sorry for them and bail them out. Bail out the public who just keeps paying not
    knowing any better.

    If you paid a down payment on your house and then you paid on it for even a year you paid it off
    in the banks books. 30+ times over if you paid for 30 years.

    After the first year they use your money to pay there salaries of 22 million for 22 days on the job what a joke.

  • Posted By: Tea6 @ 11/12/2008 8:20:08 AM

    If lower prices are bad, then less free trade would be the answer?

    Of course we really do not have free trade when countries are allowed to manipulate their currencies, so perhaps less mercantilist trade is the answer.

  • Posted By: antonio11 @ 11/11/2008 11:55:38 PM

    Not intuitive to me.

  • Posted By: junkmail6 @ 11/11/2008 10:44:45 PM

    Low prices and no jobs does not sound attractive to me. Corporate greed is a constant, but the government's stupidity in playing along with it is amazing Bush & Co., by constantly saying, "The fundamentals are strong" and then changing their tune to, "It's a CRISIS!" has made this situation far worse than it had to be. Thank God those idiots (yes, I voted for them) will be gone soon. Obama has a good idea. Instead of giving everyone money, so we can pay off our credit cards, he wants to do public works projects. There are many that need doing, and they are costly. That's a smart way to keep people at work, which in turn keeps all of us at work, while making lasting improvements that help everyone.

  • Posted By: RO in Reno @ 11/11/2008 9:54:34 PM

    It seems far too many depend on the American consumer, as the article noted economies everywhere lurched downward. That coincided with the stop in American consumer spending.
    I doubt there is any real opportunity for change at least any sustained change. The whole point of Globalization was to put American workers at the same income level as China or India and it is indeed working.
    The problem is there is no means of generating income that will support the broader middle class. Income that at one point was generated by manufacturing and is now all but gone.
    With 28% of Americans now below the poverty level, they will of course still buy food and the necessities but little beyond that.
    It seems from much of what has been written about the housing crisis, that our economy has been based on housing for at least the last eight years, people used the equity in their homes to maintain their life style and buying habits until it was very simply sucked dry it was indeed a temporary economic model.
    If housing prices were to increase so people could borrow more is ludicrous but it has been suggested. It would be at best a temporary fix
    A second stimulus package is a very temporary fix that would benefit China s much as anyone in this country.
    You cannot run a business with a never ending negative cash flow and you cannot run a country with a never ending negative cash flow and for some strange reason no one seems to get that.
    But the Republican economic wizards have proudly announced there is no turning back, American will never be the same and certainly not for the better.
    Welcome to the third world lifestyle.

  • Posted By: toolkien @ 11/11/2008 3:28:48 PM

    It stuns me that we had a primer on what NOT to do with a country and its money supply in the 1920's and 1930's and we went ahead and did EXACTLY the same thing! And of course business and "corporate greed" are taking it on the chin just like they did then. But it's the government itself and the Central Banking system run by a bunch of idiots that brings about crises like this because it does support individual greed instead of letting a market allocate sensibly. Everyone got drunk on the easy credit, everyone got a new car and a new 78rpm record player (ipods today), and a new ice box (stainless steel coordinated kitchens), etc etc etc. And we went down the crapper. And our own government kept dumping more money into the supply, eroding our savings, creating inflation, and tossing easy money out inf front of people, spirring them on to consume, Consume, CONSUME. And now the bubbles are bursting, not just dot.coms here, housing bubbles there, the whole damn economy was turned into a bubble.

    The best thing to do is let it burst and we'll regroup within a two years. Force anti-deflationary policies and endless Work Programs and price floors and ceilings just like we did in the 30's and this will most certainly go on for a decade or mor like it did then. Nobody had the motivation to invest because everything was socialized and no one was willing to invest in anything that had every chance to be Nationalized the next day, or invest in an industry that was going to clip you with Federally Socialized Labor battalions. And where is our Nazi Germany going to be to give us an excuse to go to war and try and pull us out of our swoon via a War Economy? It won't happen. So let's let the bomb our splendid government made go off once and for all and let's pick up the pieces afterward. Letting the dunces who got us into this try and "lead" us out will only make us a starving nation like the 30's, with no hope at all.

    LEARN from the past, don't repeat it.

    Don't listen to the economic dunces at Newsweek. Ask yourself "are they really this dumb to have not learned from the past, or do they WANT me part of the starving, State dependent hoard? Why?"

    But I doubt anyone has learned their lessons. Especially when you have the likes of Newsweek reporting the EXACT opposite of what reality has previously shown. Socialists will take us down the rabbit hole again, just like they did in the 30's.

  • Posted By: cajademierda @ 11/11/2008 3:28:47 PM

    What happened so suddenly in september is the collapse of the commodities bubble. We all saw that coming. And the concerns in this piece have more to do with large purchasing decisions which will be put off during a period of long drawn out deflation. That doesn't need to happen. If the government would stop cutting interest rates and trying to bailout homeowners, we'd get the price correction thats long overdue over a short couple of weeks and then we can get back to growing the economy again.

  • Posted By: toolkien @ 11/11/2008 3:28:37 PM

    We are making the exact SAME mistakes that made the depression last so long. Government intervention and fearing deflation. Right at the beginning of the depression steps were taken to avoid deflation and that is exactly WHY the depression lasted as long as it did.

    And GREED didn't bring this about directly, humans have ALWAYS been greedy, it's ever present. So what brings about crises like what we are in, and it's Grandfather, the Great Depression? Rotten monetary policy. Free money. Dumping endless money into the system, credit a breeze to get. Who controls this? The Federal Reserve - a quasi-governmental agency that even moreso today is used for the expediency of the government, not the people. So in some respects it WAS greed, greed for power by politicians who have stolen sound money and use it as means to solidify their positions.

  • Posted By: EducatedPorWhtrash2u @ 11/11/2008 12:38:15 PM

    We need massive deflation. We need to get back to where the costs of items are where they were in the
    50's and 60's. Two to three thousands dollars for a new car. Gas $40 cents a gallon, A new home for $25K
    and keep our wages as they currently are. That way everyone can afford to live the american dream not just the rich and greedy ones. Inflation has been out of control because of world wide GREED for the last 3 decades. And no you are seeing what the rich and greedy have brought us too. Poor people lets take over the country and take back what is ours, we are the ones that have worked,sweated,and bled to build this country.
    And the rich have just used us, rode our coat tales, all the way to the top because they have no scruples, or
    compassion for thier fellow man. God will make them all pay on judgement day.

  • Posted By: riddelup @ 11/11/2008 8:49:18 AM

    Deflation is a sign the economy is under stress. It is not a stress to the economy any more than a cough is a stress to a person with a cold. When the economy is responding to a situation in which assets are over valued by adjusting values downward one should expect prices to decline. When assets decline in value the holders of those assets will lose in the value of their wealth. The market must be allowed to adjust and someone has to pay s

  • Posted By: Lubbock @ 11/10/2008 3:00:47 PM

    Excellent points we are on a slippery down turn rightly deserved. Our leaders in Congress and the Senate have been spending out of control for over 40 years, with 11 TRILLION in debt we have become a debtor nation How is it possible to bail out so many with Bilions and Trillions when we are broke and owe China and other nations? With a 99% sure thing of getting re elected the pork and perks bandits in Washington are not impacted with any of the misery they place on us

    • Posted By: NormColeman @ 11/10/2008 10:58:27 PM

      The spending started in the Reagan years... President Clinton balanced the budget and created a surplus. Our current Mr. Bush, and 12 consecutive years of Republican rule in congress went crazy spending borrowed money on things that did not help the citizens or our economy. The last two years congress has been struggling to clean up the mess. Broad based disapproval of governement spending is ignorant. Irresponsible spending by radical Republican leadership is the culpret. Let's assign blame where it is due. What happened to the true Republicans who believed in fiscal responsibility and moderation? The new Demacratic Party now embraces these ideas more than the GOP. It's like the whole world is upside down. At least we can all rely on a small group on the right that attacks and hurls insults like "liberal" at anyone with a differing point of view. (even if they are in the same party)

  • Posted By: NormColeman @ 11/10/2008 9:51:53 PM

    This story is complete BS. The idea that we need prices high is a lie. If prices go up again it will help no one but the producers. Producers that now have monopolies created by factions within our government. The consumer won't be able to make purchases and prices will have to go down again to stabilize the economy. The problem now, as was then is that there is no money flowing. Greedy people and Mega-business are holding the money, squeezing the rest of us. 5 percent of Americans hold 95 percent of the wealth. They are not spending or investing. They also pay far less tax than they should, so the govt. has less to spend. The government budgets have been slashed, the only money they spend is going out of the economy and staying out. The businesses that are making record profits like oil companies are international businesses that draw money out, but do not reinvest in the US economy or it's workers ( ironicly they do enjoy the protection of US military). They also are not adding to the tax base. Many military contractors that are the benefactors of US spending are also "offshore companies" that are not moving the money back into the US. The problem is exacerbated by the fact that the banks are holding money, not loaniing or investing, so once again nobody has the resources to create jobs or opportunity (except the biggest corporations which are consolidating and cutting jobs or choosing to hold on to what they have). Banks are getting massive tax breaks so they are not adding to the tax base. Like it or not the government needs to spend for the economy to function properly. That's how we came out of the Great Depression. However they need to create jobs or spend on sectors that will in turn create jobs and invest in the US, as well as companies that will actually pay taxes to keep the economy rolling. This story is a bunch of disinformation BS- likely a cover story planted by the oil companies. Don't fall for these LIES! There is truly a cause and effect relationship going on here, but the author has it backwards. The price of oil was inflated by the actions of speculators not global demand. Banks' financial problems were brought on by their own misteps. Real estate speculators in collusion with lenders, builders and appraisors created the housing crises. Government spending on the wrong things, making interest payments to international banks and cutting taxes has compunded the lack of money flowing through the system. Mr. Bushes deficit spending has lowered our credit rating and depressed the value of the dollar. Deflated consumer prices is not the problem. Never was.

  • Posted By: 4carol @ 11/10/2008 4:27:43 PM

    The real reason we've come to this economic crisis is GREED. A Wall Street where no one cared about their customers and stockholders unless they gained from it; car companies who knew this would be coming years ago, but chose to ignore it for bigger gains; oil companies who could have invested some of their outlandish profits into alternative energy jobs, but instead bought their own stock; and all the companies and industries who chose to ship all of their jobs overseas in order to gain more and more. Not one of those companies is and/or was concerned about Main St. America; why should we pay to bail them out in any way, shape, or form???? One word and one word only has brought us to this recession........GREED!!!!

    • Posted By: More Sunshine Please! @ 11/10/2008 9:29:05 PM

      Carol, you are right on the money!!! GREED is what has brought the United States of American down, deep into this Recession that could last years and God forbid, turn into a Great Depression all over again 77 yrs. later. If Wall Street and the banking system hadn't gotten so greedy in making $$$ for themselves and thought about their consumers and what they could afford, then the consumer would still be buying AND able to invest at the same time. Now that the government is bailing out AIG another $40 billion, I hope they give the rest of the United States of America's hardworking, tax paying consumers a big fat stimulous check too - since this administration was so BIG on SPENDING IN THE IRAQ WAR, I think it's high time the government gives back to the tax payers and makes Wall Street pay and ALL the banks cut their fees in half or even more. It's time the government starts controlling these two again....... it's sad but true - these two entities behaved like kindergarders, and now they need to be babysat..... this isn't what President Bill Clinton intended for the United States of America but Wall Street and banking industry took advantage of the consumer and then they take billions of dollars fromt he Government. They just reaped what they sowed. As a consumer, I don't feel need to buy accept only the necessities these days..... it's doesn't pay anymore and I myself, like many Americans, feel we've been "raped" by the banking industry and Wall Street. Thank God there is a Democrat in the White House again, and has President Bill Clinton's people in charge once again - knowing this, there just may be some "HOPE" for the consumer in the United States of America yet. God bless President Obama.

    • Posted By: tomjen @ 11/10/2008 5:53:39 PM

      Your right...GREED is the primary ingredient in our current economic situation...but that GREED comes not only from the financial institutes, wall street stock brokers and CEO's, that GREED is also coming as much from the all the people who are out there living way beyond their means. We have to have more common sense than that and make smarter decisions for ourselves and our families instead of worrying about trying to impress the neighbors with our homes and our cars. If you and your spouse earn $80 - $100K a year and some mortgage lender tells you that you qualify for a $250,000 or more home loan, even though you have 2 kids, 2 car payments, etc. COMMON SENSE will tell you that you will be so broke from week to week that you will not be prepared for the unexpected...like higher gas prices, vehicle maintenance, or medical emergencies. Come on...people need to stop trying to compete with one another and just learn to be happy with what you have...and can afford!!!

  • Posted By: zebras wear stripes @ 11/10/2008 3:51:06 PM

    The motor car companies have been engaged in predatory sales & lending practices for over 50 years. Many people are afraid to deal with the sales people in their local dealers of the motor car companies! And their pricing is the most non-transparent when compared to other industries.
    This would be a good time to negotiate the end to the auto industries practices of taking advantage of consumers, which is very important to the consumer because purchasing a motor vehicle is the 2nd largest purchase a person makes after a home.

    • Posted By: zebras wear stripes @ 11/10/2008 9:18:06 PM

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  • Posted By: rube @ 11/10/2008 2:01:18 PM

    It would all be worth it to see President Bush and Dick Cheney get thrown in jail- where they deserve to live out their days! I wish my fellow American good luck in the rough ride weve been though and to where we will be going!

    • Posted By: Lubbock @ 11/10/2008 7:05:54 PM

      You are so right we tried and got your guy Clinton impeached to no avail

      I know you will find this hard to swallow but George W will go down in history with his pants up and probably be classified as a good man

      • Posted By: r2626 @ 11/10/2008 7:58:01 PM

        Yes, I do find it hard to swallow.. Just like all the other lies you tell.

  • Posted By: Lubbock @ 11/10/2008 3:02:55 PM

    Thank gawd we will be saved by Obama; he wants everyone to not have a mortgage, work for the union, work for the government, have health insurance, get food stamps .....I hope he will come through no one will have to work....but oh where will the taxes come from for the revenues?? back to lala land

    • Posted By: chiefagc @ 11/10/2008 4:54:45 PM

      lUBBOCK
      YOUR POST IS A POOR DISGUISE FOR RACISM. oBAMA DIDN'T CAMPAIGN ON ANY OF THE CRAP YOU MADE UP. iS YOUR TRAILER PARK RAISING MONTHLY LOT RENTS AGAIN?

      • Posted By: Lubbock @ 11/10/2008 7:02:56 PM

        Just keep the slaves on the welfare plantations quiet will you this is the lifeblood of your party

  • Posted By: beyondgreen @ 11/10/2008 7:00:13 PM

    Energy Independence needs to be included in the realm of our economic issues. Our dependence on foreign oil impacts every aspect of our society and economy. This past year is a testimony to that fact. Jeff Wilson has a great new book out called The Manhattan Project of 2009 Energy Independence NOW. I highly recommend this book to anyone interested in seeing our country become more energy independent.



  • Posted By: Grandma in Illinois @ 11/10/2008 4:22:49 PM

    Don't bet on a 'service economy' to help stave off the downturn that is aleady here. Who can afford those service industries if no one has a job with a living wage? Bring back manufacturing, We can't keep buying the $15 toaster from China that I have to throw in the landfill after two years because the element burned out. I would buy the $25-30 one if made in the USA providing it has more quality. We don't need more gadgets, we need money in the bank and to actually pay off the mortgage - not get a second mortgage disguised as a 'home equity line of credit' to buy that new boat or the new furniture. Houses were too high, gas was too high.

    • Posted By: farmgirl567 @ 11/10/2008 6:32:59 PM

      WTG, Grandma! You said what the media missed. (As usual!)

      I'd like to add just one thing, though. America has been drunk on consumerism for a long time. Those of us who live within our means have been snubbed by those living on the edge for years. Now that our frugality and common sense has kept us from falling behind on our payments for our dumpy little houses or our rusty old cars, we are finding that our own taxes will go to bail out our neighbors up the street who were able to "afford" reliable cars and comfortable houses using risky loans. They get to keep their stuff and they're laughing all the way to the bank. Two years ago those "poor" people were telling us how stupid we were. Now I believe they were right. What a lesson for our kids.

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