NEWS: Economic Apocalypse! Lube Up!

POLITICS: Economic Apocalypse! Lube Up!

The American economy is about to come to a grinding halt. You are totally fucked if you buy food, gas or anything. The U.S. economy is not just slowing down, but crashing, switching from strong positive growth to negative growth. This shit ain’t going to be pretty.

Obviously, housing prices are plummeting. Homes are sitting unsold and vacant in every neighborhood, as the grass turns brown and the plants die. Pools are turning into birth stations for mosquitoes. Many people are just walking away from their mortgages because their home is worth far less than what they owe. Thankfully, our government is bailing out the companies who made all the shady deals. It’s socialism for the rich! Yay!

You want to know how bad the housing market is....

Two for one houses! Oh, my God! We're fucking screwed!

Meanwhile, inflation is here and it’s a bit of an asshole. Prices on everyday products are going through the roof. Gas and milk are up to over $4 dollars a gallon. Just walking down the aisle at my local grocery story, I see product after product up around 25%. And the containers are smaller. It’s less food for more money. That’s how inflation works. But I can lose weight, so it’s pretty sweet!

The difference between this recession and past recessions is we are at a point where there is nothing left to squeeze. We’ve been experiencing inflation for years. No, not the economist bullshit technical term for inflation, but the kind you live through. Rising prices of non-traded goods, like insurance and health care, have been kicking the shit out of most Americans since the early '80s. And dollar-priced traded goods, like energy, for which we don’t have a substitute, have also been steadily rising for 10 years. Now we can expect cheap products, like the ones China sells to Wal-Mart, to shoot through the roof as the China yuan appreciates to avert domestic inflation. Suck it, America.

Now people are selling their gold jewelry, heirlooms and coins to get by.

Sounds fun. At the same time, there is a credit crunch. It is now harder to get loans and credit cards, because the banks fucked up and gave loans to a bunch of idiots who shouldn’t have gotten them. So, household access to credit is declining. People use credit to get through the hard times, but they are maxed out and the hard times aren’t even here yet. Seriously, they are not even here yet.

And people are losing their jobs as the economy slows. As it stands right now, the median U.S. household, if deprived of credit and income loss, has enough savings to last 18 days. That’s down from 30 days in 2001. We have been told to buy, buy, buy on credit for years. Now that incredibly moronic philosophy is coming to a quick and brutal end. That’s why people end up selling their gold watches and their children.

Where’s all that gold going? Shouldn’t the price drop if people are selling gold? Nope. The rich guys are snapping it up. Hedge funds, mutual funds, ETFs, investment banks and financial advisors, who have clients living the sweet life in the top 5% of net worth, are grabbing that gold. Since 2005, only the top 5% of American income earners have experience any real gain. It’s getting a little top heavy up in this bitch, like France 1790 top heavy. Get some scrap wood together and build a guillotine in that garage!

In the '70s, when we were in the same sort of economic situation, people lined up to buy gold and silver. They were converting their savings into gold and silver to protect it. But now, those people in the same income bracket are selling, because they don’t have savings, they have debt. So, they are buying dollars instead. At the same time, the Fed is printing money to fight the debt deflation unleashed by the housing bubble collapse, which causes the price of the dollar to drop and drop. It’s an epic disaster!

Debt deflation is a fucked up situation to live through. Here’s Dr. Steven Keen, an economist for the University of West Sydney who specializes in debt deflation, explaining what goes down.

Uh oh. That dude said 1930.

Hey, lookey! The stock market is tanking!

Yikes.

This is a train wreck. There has never been a period in the history of the world when the people carried the amount of debt we are carrying today. The lenders just finished lending out to the bottom of the barrel Americans: The sub-prime borrowers. Now it is biting them in the asshole. (Except, of course, the government is giving them tons of cash to make up for it.) And those borrowers were the end of the line. They were the people who did not deserve and never should have received loans. The problem is, they had to be doled out, because our economy is now a credit economy. We don’t make things anymore. We make our money from finance, investment and real estate. Or we did, anyway. That shit is coming to an end.

Gas is the tipping point. The United States was not constructed for high gas prices. As a country, we quite simply cannot function with such high prices. People who drive the greatest distances are those who can least afford the rise in price. The janitor who drives 50 miles to work in his SUV is completely fucked. He can’t sell the car, or afford the gas. Public transportation you say? There is not a city in this country that can handle the load of so many people making the switch to public transportation. There aren’t enough buses or trains. And if Bush bombs Iran, well, you can kiss the America you know goodbye. Think Mexico.

Even if situation does not get worse from here on out, this current mess will not work. When the vast majority of people are suffering and the rich are getting richer, the politics change. We are now there. Just take a look at the approval polls of Republicans. A shift is coming and it will change the way predatorial finance companies do business – but it will be ugly getting there.

People are beginning to understand that they are being lied to on a daily basis. You can’t tell us the economy is humming along; when we know it is not. And it hasn’t been for years. Every president since Reagan has changed the way economic information is collected and reported – Clinton was the worst of all. So, when the reality on the ground does not match what people are seeing, they stop believing you. There has always been a disconnect between politicians and the populace, but now that disconnect is just as large between the media and the people. That is where we are now and people are angry. America is a lit fuse.

Americans are fine when they are able to just scrape by. We took the years of working long hours or two jobs to afford that 100-mile a day commute to get to our overpriced house. America listened to the news, and the bogus economic statistics for years. Something didn’t seem right, but everyone went along. Now, with the housing disaster, insane gas prices, a plunging dollar and big time inflation, people are at their breaking point. It’s going to come very, very, soon.

We're going down.

Johnny can’t afford $1000 a month in gas. And he can’t afford the rise in food prices. And he’s got no savings. And he can’t afford health insurance. And he’s in massive debt. Who is Johnny going to get mad at? For every action there is a reaction. You can’t fuck over the poor the way this country has for 28 years without massive blowback. Time for the big boys to start watching their ass.

And that’s only the beginning. Periods of financial instability always lead to war. They always have. Wars begin because of debt. Oh, and some big country seems to be taking our oil….

That's a pretty bleak outlook that unfortunately rings all too true. Many of us have had this fear for months of a complete and utter Stock Market collapse, and it seems we're just a turning corner away from it. You're right; its going to be very, very ugly. Thankfully there are some of us, like myself, who've been saving for the last couple of years, though it was never for this reason. I really pity those who put their heads in the sand in the last six months though. The outcome of this has been fairly apparent for at least that long. And now its glaringly obvious.

We are totally screwed. Here's hoping I can get a loan for school this year or its payment plan ahoy!

Also: where was this article hiding for the past two days?

From the NYTimes:

OUr world is crashing and we are still being encouraged to shop?

I am kind of embarrassed to admit this, but I have always been totally stumped by economics. It is just not something I have ever been able to force my brain into understanding. But I can say that my husband and I finally saw the light and have tried our hardest to get out of the debt cycle. We no longer use credit cards, we used his reenlistment bonus to pay off our vehicles, and budget the hell out of ourselves in order to try and get a 6 month bill cushion in our savings account. We were up to 5, and then had to raid the hell out of it for an emergency, but we are slowly getting it back up again. We get our healthcare through the military, and since he is deployed, it is going to be free for us starting next month.

If things are as bad as you say they are, and I've heard it from other people who I trust as well, I hope that our little plans may be enough to keep us from going down the drain. (in the short run)

Can anyone here possibly tell me how this may affect the war? I mean, is it going to get so bad that our country literally cannot afford to fight any more? Is the current war part of this economic problem?

Yes Democrats and Republicans have lied to and fucked over most Americans for a long time yet 95% of the people will vote for a Democrat or Republican for President and Congress. Until most people realize neither party will make the big changes needed they will continue to get fucked over. People get the government they deserve.

Oh but of course. Someone's got to have money when the economy tanks.

And this:



Is my new favorite image! It's a wonderful investment opportunity, not an absolute sign of desperation! Thanks for finding this FTR.

Hurray for cannibalism!

Same here. However, I've learned one key phrase that keeps popping up, and that is "investor confidence." Apparently, it's the basis for all things economics. That's when I came to the conclusion that economics is pure bullshit. Just a bunch of people can either go "everything's a-okay" or "oh my God! We're all gonna DIE!!!!" and a company's stock can soar or plummet, respectively. You might as well have a spooky shaman placing bones into shapes and shaking a stick. It's a lot more fun, and just as practical.

If I'm understanding this wrong, can someone who actually understands how the stock market works explain it?

The wars have contributed to the budget deficit which is a big reason for the value of the US dollar going down. If the US dollar keeps losing value-and I see no reason it won't-other countries will be more reluctant to lend the US more money. They will demand higher interest rates that the US can't afford to pay. China is one of the big lenders to the US and I think after the Olympics they will demand higher interest rates and that will be the beginning of the end of large foreign wars for the US. I think you're better prepared than the vast majority of people in the US so I wouldn' worry too much.

Whoops double post

The war has been funded with mostly borrowed money from the get-go. Shoving the huge bills off-budget makes them easier to pass and masks the real cost. Your kids and mine (if I ever have any) will be footing the bill. The deficit funding is catching up now, as debt repayment eats up more of our government's tax revenues, leaving less for other essential government services.

This huge debt load (along with the weak US dollar, another of our government's bad policies) also makes investing in US government securities less attractive, ultimately driving up the interest we must pay on government bonds and securities and increasing our cost of raising investment funds.

Any time I've ever watched a finance show, half the guys have one theory and the other half have a drastically different one and they're all suggesting different solutions and trying to act like they are the end-all for financial wisdom. It all seems like a bunch of fucking voodoo bullshit to me.

Horde $0.05 Nickels as a hedge against inflation. The metal in Nickels is worth more than their $0.05 face value. Nickels are the only circulating coin currency that has a high metal value. Silver content was reduced in $0.25 Quarters in the mid 1960s. Copper content was reduced in the early 1980s. Very soon, the government may do the same for Nickels or they will simply be taken out of circulation. Just don't melt them down Nickels, it's illegal.

Actually pennies are also worth more as metal than they are worth as pennies, copper prices are steadily rising.

I think we are owed a real life tour, but we can at least laugh (while crying) at the one the Onion made up:

Bush Tours America to Survey Damage Caused by His Disastrous Presidency

Here is a NYT piece from Barack's economic adviser from 2/1/2007 asking WHY the govt would continue to mint pennies at a loss given they no longer have value and given the price of copper.

But pennies are 97.5% zinc.

Hopefully zinc prices are rising too.

Also, I think that they cost more to produce than they are worth, not that they are worth more as metal than a penny.

Though pre-1982 cents do contain 2.65 US cents worth of copper.

Another interesting factbit

wiki

This all sounds eerily familiar...

Oh, that's right!

SPOILERS! (Click to view)

Now I know how to deal with my neighbor's annoying mutt. Thanks Mr. Link.

Bill_the_Cat said:
This all sounds eerily familiar...

Oh, that's right!

SPOILERS! (Click to view)

The difference is that we are not going to be invaded by barbarians, nor do we have a highly unstable form of government.

This is gonna suck no doubt but other countries have been through worse and survived just fine.

Still tho I am not looking forward to any of this.

You might want to reconsider hoarding or melting nickels/pennies.

U.S. Mint Bans melting pennies, Nickels
By MARTIN CRUTSINGER (AP Economics Writer)
From Associated Press
December 14, 2006 12:26 AM EST
WASHINGTON - Given rising metal prices, the pennies and nickels in your pocket are worth more melted down than their face value - and that has the government worried.

U.S. Mint officials said Wednesday they were putting into place rules prohibiting the melting down of 1-cent and 5-cent coins. The rules also limit the number of coins that can be shipped out of the country.

"We are taking this action because the nation needs its coinage for commerce. We don't want to see our pennies and nickels melted down so a few individuals can take advantage of the American taxpayer," Mint Director Edmund Moy said in a statement.

Officials said they had received a number of inquiries from the public in recent months concerning the value of the metal in the coins and whether it was legal to melt them.

The new regulations prohibit the melting of 1-cent and 5-cent coins, with a penalty of up to five years in prison and a fine of up to $10,000 for people convicted of violating the rule.

The rules also require that shipments of the coins out of the country be for legitimate coinage and numismatic purposes and cap the size of any one shipment to $100 worth of the coins.

Because of the prevailing prices of copper, zinc and nickel, the cost of producing pennies and nickels exceeds the face value of the coins.

A nickel is 25 percent nickel and 75 percent copper. The metal in one coin costs 6.99 cents for each 5-cent coin. When the Mint's cost of producing the coins is added, the total cost for each nickel is 8.34 cents.

Modern pennies have 2.5 percent copper content with zinc making up the rest of the coin. The current copper and zinc in a penny are worth 1.12 cents. The cost of production drives the cost of each penny up to 1.73 cents.

Pennies made before 1982, which are still in circulation, would be even more lucrative to melt down because they contain 95 percent copper and only 5 percent zinc. The metal value in those coins is 2.13 cents per coin, Mint officials said.

The new regulations are being published in the Federal Register and will go into effect as interim rules which will not become final until the government has a chance to consider possible modifications based on public comments.

http://www.nytimes.com/2007/02/01/business/01scenes.html?ex=1327986000&en=fc1b2020abae45d6&ei=5090&partner=rssuserland&emc=rss

The first rule of Project Mayhem is you don't ask questions.

Colinism said:

Bill_the_Cat said:
This all sounds eerily familiar...

Oh, that's right!

SPOILERS! (Click to view)

The difference is that we are not going to be invaded by barbarians, nor do we have a highly unstable form of government.

This is gonna suck no doubt but other countries have been through worse and survived just fine.

Still tho I am not looking forward to any of this.

The thing is the Roman Empire was already beset by arrogant decadence, rabid consumerism, governmental corruption and popular complacency before the barbarians ever crossed the Danube. The Roman form of government was stable for almost a thousand years before it was completely consumed by greed and corruption. No representative democracy has ever had it's limits tested that far. I don't think it's very difficult to acknowledge that it can't be much more difficult to by favour America now than it was in ancient Rome. You say other countries have been through worse, and that may be true, but it takes a long time for them to recover and usually requires a radical change in national philosophy.