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How do you stem a recession?
Posted on 1/15/09 at 9:26 am
Posted on 1/15/09 at 9:26 am
Seems like it is a never ending cycle of reduction in consumer spending which results in job loss which results reduction of consumer spending, ect.
Is massive government spending the only way to break the cycle?
Is massive government spending the only way to break the cycle?
Posted on 1/15/09 at 9:33 am to DandyPimp
well different recessions are caused by different events. This one is caused primarily by too much easy credit and home loans over the past few decades. So saying that massive government spending (through debt) is a way to get out of this recession is like saying the way to get over a hangover is to get drunk again.
Posted on 1/15/09 at 9:34 am to DandyPimp
It all really depends on what the causes of the recession are.
Our current recession is more the result of previous excess... it is more of a return to a managable consumption level at both the consumer, business and eventually (ha!) government level. We have spent, at all levels what we dont have, and the issue will not be resolved until spending and heaven forbid savings can be supported by income.
To inject further additional borrowing and spending into this cycle simply will drag out the inevitable deflating and deleveraging of the economy. The only cure is for the inevitable contraction to take place and in my opinion, the sooner we let that happen the better.
Our current recession is more the result of previous excess... it is more of a return to a managable consumption level at both the consumer, business and eventually (ha!) government level. We have spent, at all levels what we dont have, and the issue will not be resolved until spending and heaven forbid savings can be supported by income.
To inject further additional borrowing and spending into this cycle simply will drag out the inevitable deflating and deleveraging of the economy. The only cure is for the inevitable contraction to take place and in my opinion, the sooner we let that happen the better.
Posted on 1/15/09 at 9:35 am to DandyPimp
You don't try to stem a recession if it is being caused by natural market corrections. You might try to stop the U.S. from going into a depression right now, but I don't see how what our gov. is doing right now is helping that cause at all.
Posted on 1/15/09 at 9:39 am to DandyPimp
the only way to not have recessions is to prevent them, and the only way to do that is to have anemic growth all the time.
Posted on 1/15/09 at 9:42 am to DandyPimp
quote:
How do you stem a recession?
How do you stem a hurricane? We just have to let this play out. Nearly everyone in the global economy was basing their business models on incorrect assumptions primarily because the housing market was improperly priced. We weren't as rich as we thought we were which means we'll need fewer TV's, buy cars less often, etc. Once we hit bottom we can pick up and start growing again. That is the nature of business and no matter what the politicians tell you, we can't avoid the pain anymore than we can give back the artificial highs we had.
Posted on 1/15/09 at 10:07 am to TigerinATL
Just seems like bad news begets bad news which starts the cycle again.
Posted on 1/15/09 at 10:25 am to DandyPimp
quote:
Just seems like bad news begets bad news which starts the cycle again.
Yes. Just like we went past the natural top on the way up, we will likely go past the natural bottom on the way down, but eventually someone realizes we've gone too far and the pendulum starts swinging back the other way. It's the boom bust cycle of business.
Posted on 1/15/09 at 10:43 am to igoringa
quote:
it is more of a return to a managable consumption level at both the consumer, business and eventually (ha!) government level. We have spent, at all levels what we dont have
It amazes me how many people, both normal folks and talking heads, just don't get this. They think they are somehow entitled to keep spending at this unsustainable level.
Posted on 1/15/09 at 12:48 pm to Cold Cous Cous
Ticket prices of big 10 and pac 10 games should be quardrupled. That would stop this recession. Oh wait...they have already done that. Well...they'll just have to jack up the big 12 tickets too. Take one for the country, big 12. Spend some of that oil and ethanol money so I can afford granite counter tops. :)
Posted on 1/15/09 at 4:19 pm to DandyPimp
Apparently the Fed doesen't know the answer to your question.
'A cat fight at the Fed'
Wednesday, January 14, 2009
'Apparently they're not all singing from the same hymn book these days over at the Federal Reserve as Philly Fed President Charles Plosser has broken ranks with Fed Chief Ben Bernanke on how the central bank is using its massive balance sheet in what appears to be a never-ending attempt to save the world.
At this point, with things as bad as they've gotten, you have to stop and wonder, "Would it really be any worse if, from August of 2007 on, the Fed and the Treasury Department had done nothing?"'
Plosser, in a speach Tuesday, was very critical of current Fed actions...The plot thickens...
LINK
'A cat fight at the Fed'
Wednesday, January 14, 2009
'Apparently they're not all singing from the same hymn book these days over at the Federal Reserve as Philly Fed President Charles Plosser has broken ranks with Fed Chief Ben Bernanke on how the central bank is using its massive balance sheet in what appears to be a never-ending attempt to save the world.
At this point, with things as bad as they've gotten, you have to stop and wonder, "Would it really be any worse if, from August of 2007 on, the Fed and the Treasury Department had done nothing?"'
Plosser, in a speach Tuesday, was very critical of current Fed actions...The plot thickens...
LINK
Posted on 1/15/09 at 6:48 pm to DandyPimp
quote:
How do you stem a recession?
war
a nice big, sloppy war
Posted on 1/15/09 at 9:22 pm to Uncle Stu
That used to be the answer before lots of countries built nuclear weapons and delivery systems.
The economy is bad now, what do you think it would be like after a nuclear war?
The economy is bad now, what do you think it would be like after a nuclear war?
Posted on 1/15/09 at 9:53 pm to Rivers
people only need so many new cars, tvs. etc, however, after a period of time, eventually , people will come out from under the rock, people need new furntire and clothes, cars, wanna buy a new house. most people always find a way when they want something on how they are gonna get it paid for in order to aquire it. the ice will begin to break up in the next few months......
Posted on 1/16/09 at 6:25 am to Plucked
'most people always find a way when they want something on how they are gonna get it paid for in order to aquire it. the ice will begin to break up in the next few months......'
Most people will find a way if their bank, credit card company, mortgage company, etc agree to lend them some money...Or, they hit the lotto, rob a bank, inherit some money, move in with mom and dad, etc.
Easing of credit and willingness to borrow are the keys and some banks have recently demonstrated that they are willing to lend...to those that are good credit risks.
Most people will find a way if their bank, credit card company, mortgage company, etc agree to lend them some money...Or, they hit the lotto, rob a bank, inherit some money, move in with mom and dad, etc.
Easing of credit and willingness to borrow are the keys and some banks have recently demonstrated that they are willing to lend...to those that are good credit risks.
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