bostonbubble.com

[melonrightcoast]

I don't know if another blog is "newsworthy", but I found this read very intriguing:

http://www.oftwominds.com/blogjune09/depression06-09.html
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melonrightcoast ... are you?

[balor123]

[balor123]

There's certainly a lot of good observations in this article but it even makes me look like a perma-bull! There is some good in this country and a lot can still be recovered we've just taken a few wrong turns.

In any case, there's plenty of evidence in here for what I've mentioned in other threads: protect yourself against inflation! Speaking of which, I realized the other day that not only are carry trades a good way to protect yourself but they also provide a good source of easily accessible uncorrelated high yield growth! The best part is that you can do it through ETFs, protecting you from income taxes until you are ready to sell!

[Boston ITer]

Looks like NYT's Paul Krugman has announced the next Depression ...

http://tinyurl.com/2brckw4

[balor123]

I don't like him much but I think he has a point about Greece. What I think he misses, though, is that spending during depressions alone doesn't get you out of them. He mentions that you need to keep balanced budgets over the long term. Greece is screwed because during good times they didn't balance their budgets and now they simply have no good choices. He calls for more spending but America is caught in the same trap.

[GenXer]

Spending more does not get anybody out of being broke. Governments are not an exception. In fact, if we are broke on paper, we are broke, no matter how much money we can print. This is the same thinking that led to this and previous crises - we can just 'repackage' our 'toxic' debt into AAA rated securities and sell it. At some point, treasuries will become toxic, if the current spending spree is not stopped.

Its funny, but Europe has it right for once. Who would have thought that G20 would be lecturing Obama on finances.

There won't be a depression, but a very, very long recession is for sure. Unemployment will probably stay around 10%, and maybe it will jump to maybe 12% or 15%, simply because of all the people who run out of benefits 99 weeks out. But otherwise, this is going to be a new normal from now on until Congress stops spending and starts cutting. It will take a while to clean up our act, but that's the only way to get out of debt.

There is a 'model' planning scenario in the latest Investment News magazine dealing with a family (in their early 50s) that has 2 kids and is making upwards of $285k a year. This family barely has any savings, at least not the kind of savings required to retire given their current consumption and spending levels. Their 2 kids will have their college paid for, at least in part (they can't afford to pay more than $100k per kid). They have a modest $450k house. They need to start taking care of their elderly parents. Everything seems very normal. Except that they only have maybe $500k saved up to now, and no way to save a lot more in the future given their liabilities. A family like that around here would probably not have been able to even afford all of the above, given the housing costs and spending levels. And they are probably top 1% or less as far as earnings go. I can only imagine what everybody else is doing without such incomes, but with houses which are much more expensive. I mean, maybe in 10 years they'll be able to do well, with the kids out of the house (they hope!), but that leaves very little time until their retirement, which by the way, many people would like to happen sooner rather than later (say 62).

[renterstill]

Do you think that in 15-20 years there will be any social security for the retired?
I live and plan on the assumption that we will get 0 or close to 0 from SS. If we do I count it as an icing on the cake. I'm still hoping that medical care will not be prohibitively expensive for elderly, but it might be substandard at best.

[mpr]

[mpr]

[admin]

[Boston ITer]

[john p]

Lets put this dicussion in historical context so when we go back and read it later we know.

Currently there is a G20 Economic Summit in Toronto. There was a G8 Summit prior to this meeting.

What is going on is that we have the US wanting more Stimulus (priming the pump) or keeping gas in the economic machine to keep it from stalling, and you have the case for Austerity, or creating a miles per gallon standard for government spending to lower deficits and reel in loose credit and lower leverage limits etc.

Obama's policy is basically:

I'll start my diet on Monday.

[CC]

Of course U.S. dollar is still the world's most trusted currency, but the percentage in the global trade is getting lower almost each year. Country like China doesn't want to hold that much dollars anymore. They are buying gold, resources or exchanging other currencies.

The have learned the lesson, for example they bought junks from Freddie Mac and Fannie Mae and lost more than three hundred billions. Now U.S. dollar is getting stronger, but it has nothing to do with our economy. It's because there are just too much money in the whole world, and they have to go somewhere safe, just like they flowed to EU last year.

No country or currency stays on top forever. It's not difficult to see signs that the dollar is starting to slide, though I think the bad time will come until at least when we are all retired.

[CC]

BTW, regarding to the article of Paul Krugman, I think US and Europe will become next Japan which has..... 2-3 lost decades? I also think there won't be a depression like 1930, but a very very long recession is still a depression.

Very sad for young kids.....

[GenXer]

Not if we can help it. Vote the bums out. Starting in MA. It doesn't matter whom you vote for, as long as they are for cutting spending, taxes and government. We can't spend what we don't have. I'd rather have our standard of living lowered because we are saving rather than because we are overspending.