We Are Not Headed for a Great Depression

Major issues late in an election cycle should ALWAYS be examined to determine it they could be politically driven. The larger the issue, the more it should be questioned. The questions to asked are: Is the issue real or a media frenzy?

Quote from Ken: "I think the next logical step for The government is to start buying large oil companies. We (our government) may even turn a profit by jacking fuel prices really high. Then we will not depend on Foreign oil, because we will own it. Would that not be awsome or what?" 1) "I think the next logical step for The government is to start buying large oil companies." How is this logical? Can our government (the US) buy nationalized oil companies in foreign countries? Can we buy the Saudi's oil apparatus? How about Russian state owned oil companies? We can nationalize our own, but to what effect? Charge the consumer exhorbitant prices until few can afford to drive? Ban foreign oil imports so that there is no competition with our state owned oil companies? These things will cause shortages if you control the price, and massive price increases if you don't. The result is severely inhibited economic output. Can you pay 20, 50, 200 dollars a gallon? 2)We (our government) may even turn a profit by jacking fuel prices really high. So we nationalize American Oil and drive the price through the roof? Foreign competitors will only see higher profits because no one in the US will buy american made gas due to our inability to compete with cheaper foreign oil. If we ban foreign oil, as stated above, there will be severe reprecussions. Controlling only American oil suppliers' prices will drive those businesses to extinction unless we rely on heavy tax derrived subsidies at which point there government will not see any profit. 3)Then we will not depend on Foreign oil, because we will own it. How will we not depend on foreign oil? Because we can't buy foreign nationalized oil companies, we could only acquire those companies by invasion. Do you want world war three? How 'awesome' would that be? Please spend some time educating yourself about economic principles before contributing. I recommend http://mises.org as there are good resources for laymen readers.

Elizabeth, do you want to amend that? The market just crashed. Just, wow...

The Dow Jones industrial average is down more than one-third from its high a year ago. The stock market lost 89% of its value from its peak during the Great Depression. During the most recent bear market, from March 2000 to October 2002, the market lost about 50%. Same for 1973-1974 and two other times since 1937. With stocks down 36%, we are closer to a bottom than a top. Most, if not all, of the bear damage may have already been done.

That's a pretty severe logical error there, Emac. If we aren't headed for a Great Depression, then yes, at -36% we are closer to the bottom than the top. But if we are headed for a depression, then we aren't even halfway down yet, and are barely a third down. To argue that we aren't headed for a depression because we're only down 36% is to argue that you know where the bottom is. I don't think you know that. Further, I don't understand how people claim ours is the wealthiest country in the world when we have close to $60 million million dollars in debt and have to ask foreigners for $2 thousand million every day. If I came up to you on the street and asked you for $100, I can almost guarantee that the first thoughts through your head would not be "Man, this guy must be loaded!"

I wrote an op/ed about a month ago and have seen nothing to change my mind. The increase in the money supply will eventually deal the economy yet another body blow. Another economic stimulus package (thank you Nancy I don't benefit from any of the areas she wants to prop up with yet another $150 Billion) will just increase the money supply and diminish the dollars buying power. If we don't shut off the printing press and allow the economy and the dollar to settle down, we will experience the soup lines. Money and the economy are much like water. Left to their own devices they will find their own level. All the debts, bad mortgages, failed banks, credit crisises are much like Humpty Dumpty. Find the chicken and protect it. Chicken = Capitalism

Citizens, if we do indeed have another economic depression it will not be like the Great Depression of the 1930's. The economy has evolved since then so by saying "in the 30's people made a run on banks and unemployment was 30% we don't have that now so I don't think we will fall into a depression....etc" is a mistake. Here are some similarities to be aware of: 1.)Global economy was similar except we were like modern day china. Many countries were in debt to the US like we are in debt to China a lot can be said here. 2.)Credit was not being used. Then people did not trust the banks, now banks do not trust the banks. 3.)Marxist influences. Capitalism naturally oscillates, socialist/communist influences take advantage of the down turn to persuade the working class to Marxism. The Great Depression started around 10 years earlier for Europe and asia. This is when Russia was falling to communism. The Truth is the government will not let you know we are in a depression until my 4 year old figures it out.. What to look for: 1.)"unusual" increases in unemployment caused by restriction of credit shrinking output and investment caused by restriction of credit 2.)Price deflation or hyperinflation. Oil prices are artificially inflating prices. 3.)Numerous bankruptcies. Think of your own example. The positive here is local banks are doing well which in the 30's they were not 4.)Reduced amounts of trade and commerce 5.)Volatile currency value fluctuations to lower value

Just because we are not there yet doesn't mean we aren't headed to a depression and soup lines. Let us just pray to God that isn't what happens!

All I have heard over the past year is that we aren't in a recession. Reality, main street was in one whether or not the government cared to acknowledge it. Now we aren't headed for a depression. Well, I haven't seen one thing come out the way our government has said it would. Unfortunately, the people that have been in charge of these companies have not been remotely honest and the result of that is distrust. Things get worse everyday and maybe we aren't in a depression, but that doesn't change the fact that my parents, who have saved and tithed 10% of their income, were looking at a very comfortable retirement one month ago. Now, they have to pay for other people's lies. Worse than that, the people that created this mess still have very comfortable retirements. Does it matter if this is called a depression? Not to my parents, who instead of retiring next year, will be working another 12.

LMAO Are you sure?

I’ve advised and helped negotiate for many companies and individuals regarding acquisitions and sales of companies. In addition I’ve discussed this subject with many other CPAs and other consultants. Not one of the buyers was willing to pay 15 to 20 times annual earnings for a company. The normal price is from 5 to 8 times earnings with a rare case of great synergy or a start up when the price is higher. Why would any financial advisor advise their client to pay a greater multiple of earnings if they buy any percentage of any company? Weather an individual buys one hundredth of one percent or 100% of a company shouldn’t the same logic apply? Why would the shares be worth more when sold individually then if you bought 100% of the shares? THE STOCK MARKET IS OVER PRICED AND NEEDS TO ADJUST! Jerry

Pray

They keep saying they have to unfreeze credit. They say that jobs are going to disappear. They say small businesses on main street is the best chance at creating jobs. Stop the check writing Paulson. Write those 7 Billion dollar check to the businesses on main street. inject that money into businesses that are producing products and services. No sure how much cash that would place into the "bank accounts" of Main Street businesses, but I would be willing to bet the ROI would be more productive than the current so called "rescue-bailout".

Everyone....I truly enjoyed all your reponses and opinions. It offers hope and optimism! Also nice to read without any political opinions for a change. Good luck to us all!!!

The experts keep telling us what they want the truth to be... Experts said the boom in the housing market was a good thing. FYI experts... Many of us are NOT listening to you anymore. You led us to the wrong place before. I reserve the right to prepare my family for a depression and I reserve the right to have prepared without cause. If you convince even a few people that this current crisis is "no big deal" and you are wrong then shame on you.

For most people only three things mattered during the Great Depression: Food, shelter, cash. No credit was available. The only way for Everyman to buy anything was with cash, and it wasn't easy to get any. People who had $1,000 mortgage on a $10,000 house or farm would lose the whole house or farm for lack of ability to make monthly mortgage payments. The equity disappeared with the deed. If McCain or Obama get their way, our benevolent Govt will end up owning a lot of homes - maybe yours. Won't that be nice. Some things are different today, but some things are the same. We still need food, shelter, and cash. Credit was hard to get back then, and it is becoming hard to get today. Also, like the Hoover solution, we are facing increased taxes whether the Socialists or the Almost Socialists win in November. It might not be called the 2nd Depression, but things can go very bad very fast. Maybe they'll call it the "Virtual Depression" because it was caused by financial smoke and mirrors - or because our wonderful political leaders and their media buddies will try to convince us it isn't happening. Anyway you slice it, be careful. Don't mortgage your farm.

"In the meantime, where the heck is my reward (aka bailout) for being a responsible home buyer, choosing a fixed-rate mtg, buying within my financial means, and making my mortgage payment every month?????" Seriously. Forget holding the Mortgage giants responsible. Responsible for what? Following the mandate of congress? The bills passed by Frank and Dodd (thanks, idiots!)? It is the practice of business to try to make money. Shame on them? Shame on the people who fell for it. Whatever happened to the old adage of "if its too good to be true, it probably is"? I'm still waiting for a politician from any party to come out and say that. Unfortunately, you don't get votes by blaming voters... Oh well. I think "Idiocracy" is becoming reality, -look how many people fell for this scam. Oh well, I'm sure taxing the small and big business so they have to lay off more people will make everyone feel better. Vote for Obama (laugh!) Your company may have to lay you off to pay his taxes, but at least you'll get a tax cut.

Wow. It didn't take long for the doom and gloom crowd to latch on to this one. I'm guessing most of those posting comments on this site either just liquidated all of their remaining holdings or are calling their brokers while they're typing their response the E-mac's article. Thanks for helping to fuel the sell-off. Call me when you're done so I can pick up some deals. I guess most you were part of the same gloom adn doom crowd that latched on to the prediction that oil was going to reach $200 bucks a barrel by end of year as well. I'm no economist but I do recognize trends. Yes it going to hurt. Yes we need to stop blowing money like it's goiong out of style. Yes we need to let these institutions suffer the consequences of their liberal lending practices. We also need to allow people to suffer the consequences of biting off more than they can chew - if this means they default on their mortgage, so be it. Why should (the "Taxpayer")I bail them out when I used good judgement and didn't succumb to the notion that I have to keep up with the Joneses? Let their credit rot for 7 years and then tighten regulations on lending back to where they were in the early seventies. If you can't come up with 10% down to put on a house it's probably because you're financially irresponsible in the fist place. While it's no the band-aid the public is looking for in the current crisis, if we tigthen up the credit markets and stop treating home and car ownership as a God-given right (also read entitlement), we can prevent this kind of meltdown in the future. Too bad this will never happen with the Democrats firmly in control.

I agree with "CATS" and John McCain. The dems want us to panic and vote for barack obama and I'm not buying it. The dems created this mess along with the Republicans so why are we to trust anyone. I go with the one who doesn't change his mind with the wind.

Its obvious to me that no one here has ever lived thru the Great Depression. Oh my, I can't buy a bigger house cause moneys' tight. Oh my, the Hummer will have to go in favor of the Prius. Oh gee... My ass. The only "depression" here is in the minds of the wall street and government idiots with an agenda, and that is called "increasing my personal wealth at the expense of other people" Take a Xanax, leave us alone. How do they sleep at night? There is a new ad for the State of California that shows people not working, just enjoying life. Then the Governator says basically if you want to live like this, move here. Now he asks for $$ from Uncle Sam. Screw him. Barney Frank, Chris Dodd, Cox, Paulson, Benanke, they all should DO TIME! We want a per walk, and we want it now!! Have a nice day :)

WHERE'S MY FINANCIAL BAILOUT?

I do not believe we are headed for depression. If Obama wins we will come close. We need to clean out the congress which again, if Obama wins will not happen and we will in fact have more of the same out of control democratic old boys club! But as they say, the masses are asses, and the polls are proving that!

EcoMom has it right! Our government keeps getting bigger and bigger. The Democrates tax and spend, the Republicians borrow and spend with no end in sight. This has got to stop. Hey EcoMom, ever heard of The Constitution Party? Check them out. They seem to get it right...at least about smaller government anyway.

All Evangelicals did not support McCain - Some of us supported Huckabee, a sound conservative with moral values who agrees this is a mess - The PARTY loyals and the Republican machine who thought McCain was "Owed One" are getting what they asked for - a moderate who could bring in moderate dems and win the election - HAH!!! - All true conservatives need to get out and vote for the only option they have given us and assure the Senate does not get the 60 supermajority the dems are looking for - if not things will only get worsee - and for all evangelicals out there, pray that God can and will help us through this.

I'm not so sure. At some point, the United States Federal Govt, individuals, and all collectively, are going to have to start producing more than we consume, earning more than we spend, or this house of cards will collapse. Bailouts are like extingusihing forest fires, the fire is actually necessary to dispose of the deadwood. Putting them out just lets the deadwood collect until you eventually have a cataclysmic disaster. 11-trillion in debt?? A key difference people fail to note between the great depression and today; at the time of the GD, the U.S. was the biggest creditor nation in the world. The passing of protectionist tarriffs was a major contributer to the crisis, since it made it much more difficult for foreign debtors to repay their debt. Now, the situation has reversed 180: we're the #1 debtor nation, and our leaders are espousing unfettered free trade with the rest of the world. I'm as much for free trade as anyone, but if we keep on the current course, we'll soon be selling the naming rights of National Monuments to foreign corporations.

Thanks to some thoughtful legislation ratified after the last depression it is highly unlikely we will see stocks loss 80% of their value and 25% unemployment and 40% forclosures; however I truly believe the stock market will go below 7000. This isn't a depression as much as it is a realignment with reality. For some 25 years now we have been running on cheap easy credit that has inflated everything beyond its normal appreciation. Sooner or later the bubble was gonna burst. I say let it burst and lets get things back to where they should have been all along. It is going to hurt no matter when it happens, but it will probably hurt less now than later. We should not have passed the bailout. Its just a bandaide on a gapping wound.