• Story alerts
  • Letter to Editor
  • Pin it

Today, optimists acknowledge that the U.S. economy is slowing sharply, but they insist that if there is a recession, it will last only a couple of quarters, and then we will come roaring back. They concede that the dollar is weak and inflation is high, but the Fed will be able to raise interest rates, boosting the dollar and squashing inflation, once the economy recovers, say the Little Mary Sunshines.

But the optimists don’t see the global picture. “I believe it is perfectly possible and perhaps probable that we will suffer a depression or prolonged recession,” says Lipper. (A recession is an economic contraction lasting from half a year to a year or more. A depression is a massive decrease in economic activity spread over a longer period, accompanied by deflation.) Borrowers will remain more tight-fisted; companies and entrepreneurs will have a difficult time getting credit. “We are in for some tough times.”

  • Story alerts
  • Letter to Editor
  • Pin it

More from SDReader

More from the web

Comments

JF March 24, 2008 @ 9:49 p.m.

How did that Tom Paxton song go? "I'm changing my name to Chrysler, I'm heading down to Washington DC. What's good for Iacocca, will be perfectly acceptable to me. I'm changing my name to Chrysler, I'm heading for that great receiving line. When they hand the million grand out, I'll be standing with my hand out, baby, I'll get mine."

I left a few lines out, but you get the point...

0

electric_fish March 20, 2008 @ 8:58 a.m.

It amazes me that our government will bail out inept companies that don't know how to do business but in the same turn will layoff teachers and neglect basic needs of the society (roads, schools etc.).

0

Don Bauder March 20, 2008 @ 12:19 p.m.

Response to post #1: Exactly. It shows where the priorities are. This is one of several reasons why, adjusted for inflation, average incomes have been flat since the year 2000, while the incomes of those in the top 1 percent and 1/10th of 1 percent have zoomed. I cannot tell you why the public does not get aroused. People should be storming the Bastille. But they don't seem to care. The distribution of wealth and income is back where it was in the Robber Baron days. Back then, Populists and Progressives protested vehemently. Not now. Best, Don Bauder

0

Justice4all March 24, 2008 @ 1:40 p.m.

We live in a land of entitlement and handouts. These bailouts will cost taxpayers billions, while the executives at these firms made millions while making bad risk business decisions.

0

Don Bauder March 24, 2008 @ 3:05 p.m.

Response to post #3: You are absolutely right. The Federal Reserve and federal government have now thrown more than $1 trillion at the credit crisis, much of it to bail out Bear Stearns. What worried the Fed was the fact that other Wall Street firms were at risk, holding paper such as credit default swaps on which Bear Sterns could not make good. So the Fed was worried about the interconnectedness; other brokerage firms, banks, pension funds, and hedge funds would get hurt by Bear's inability to make good. Now, after it has been bailed out, Wall Street is resisting any regulation. The attitude is, "Let us gamble foolishly; when we fail, bail us out, but for heaven's sake, don't force us to discipline ourselves." The Fed is protecting Wall Street nabobs who rake in $150 million to $1 billion a year. And you will pay for that. Best, Don Bauder

0

Don Bauder March 24, 2008 @ 10:07 p.m.

Response to post #5: The Fed is bailing out Wall Street because of its fear of interconnectedness: Bear Stearns's reneging on derivatives might cause other Wall Street houses, hedge funds, pension funds, etc. to take a beating. So the Fed is shelling out hundreds of billions of YOUR money to protect people making $50 million to $100 million a year in salary -- perhaps $1 billion or above. Is anything wrong with this picture? Best, Don Bauder

0

Don Bauder March 26, 2008 @ 7:48 a.m.

Response to post #7: You are correct. The safety net set up in the 1930s has been shredded because the Congress refused to use restraint. Securities regulation is a joke. Medicare is terribly unstable. Social Security will have problems in the long term. The fact that infrastructure is so poor throughout the nation is the fault of local, state and federal politicians. Deficits at every level are excessive. Best, don Bauder

0

Anon92107 March 26, 2008 @ 4:47 a.m.

Don, the problems that enalbled this situation go far beyond just Wall Street and Main Street. Our federal, state and local legislative and judicial branches are corrupted, seemingly beyond redemption, by money and politics.

One of the worst case scenarios today are the presidential election campaigns, which involve three U.S. senators who participate in a leaderless congress with a 67% disapproval rating, so they have only proven so far that they can't lead in congress anymore than they can be expected to lead the nation.

Thus you need to add Plummeting Legislative and Judicial Institutions to Plummeting Dollar. We’ll need to consider the entire spectrum of institutional failures in America before we can even begin to deal with the dollar.

0

Fred Williams April 1, 2008 @ 5:29 p.m.

Stagflation, where economic stagnation is coupled with high inflation seems to be our immediate fate.

Let's face it...we've got to pay back what we've squandered. We don't seem to manufacture much, we've lived far beyond our means, and instead of investing we've wasted our money on wars and sports stadiums, the specialties of George W. Bush.

Meanwhile, our educational institutions continue to fail, while we teach our children to pray and complain rather than work hard and save. Our best students come from overseas, as do our most clever technologists.

When our system provided a free and level playing field under the rule of law, we could still attract the best from elsewhere. But, as Don has documented, we've skewed the system so much in favor of the plutocrats that only a fool would invest here now. Look at John Moores and his unpunished Peregrine fraud, half-billion dollar handout from the city, and now his grab for our airport and Balboa Park. Steve Peace, Jack McGrory, Ron Roberts, Scott Peters and other political prostitutes have all sold themselves to this crook, but no one seems to notice.

We've got a long way yet to drop in our housing prices, and wages cannot rise to meet inflation with the wage depressing effects of outsourcing. This means the vast majority will see rapid declines in their quality of life. Food, housing, and transport costs will continue to rise dramatically. Only the hyper-wealthy will be able to escape this spiral.

Honestly, I fear the worst. Social instability combined with frustration at the way we've all been screwed may lead to social violence on an unprecedented scale. This is why the very rich are retreating into private fortifications like Rancho Santa Fe and investing in Blackwater type private guards.

Is it too late? I hope not, and will work all I can this election year to get better people into positions of public responsibility. I'm afraid this may be our last chance.

Best,

Fred Williams

0

midasking April 1, 2008 @ 10:11 p.m.

Where was everyone years ago when this problem was developing? What did you think the outcome was going to be with banks giving anyone with a heart beat any amount they wanted to borrow. Did anyone write a story then? I remember a lot of cheerleading for the real estate boom. Now everyone complains that oil goes up in price! That is rediculous. This really has nothing to do with a certain particular politician and Bernanke did not cause this either. How come Sir Alan Greenspan hasn't been mentioned in this discussion? Maybe we shouldn't look to these folks for answers. Just a thought but I also remember a tech boom that brought in a new economy. How could anyone still give them any credibility? They are not problem solvers but problem creators. Without a gold backed currency debts can be expanded to the limitless fantasies of politicians and bankers.... This is the problem! Has anyone noticed the gold price and how oil is relatively flat when priced in gold? Why would anyone not believe in a centralized planned economy, but believe in a centralized planned monetary system? This whole situation is nuts and to see people pointing fingers after the fact is crazy. Yes prices have to rise because we have flooded the world with dollars. Again, what did you think was going to be the outcome? To now act suprised is pathetic. This whole situation was easily predictable. So quit crying about it.

0

Don Bauder April 2, 2008 @ 8:30 a.m.

Response to post #9: Yours is a most perceptive post. Yes, we have to pay back what we have squandered. Today (Wed.) people are crowing what a wonderful job the Federal Reserve has done bailing out Bear Stearns, taking doggy mortgage-backed paper in return for Treasury paper, etc. Nobody is thinking about the cost of this. Where will the money come from? Similarly, if the government bails out individuals facing foreclosure, where will the money come from? Fannie Mae and Freddie Mac have been told to buy more mortgages. In the long run, who pays? You are correct: the system is now run for the superrich. Tax, monetary and economic policies are all aimed at increasing their wealth at the expense of average Americans. The courts and justice systems are tilted in the same direction. Even Alan Greenspan says that income and wealth inequality may lead to violence. And he helped create it. Best, Don Bauder

0

Don Bauder April 2, 2008 @ 8:37 a.m.

Response to post #10: This is also a perceptive post. When bubbles are expanding, very few voices of sanity are heard. In the 1990s, I was writing in the U-T that prices of tech stocks were insane. These prices were based on assumptions about future growth that were not realistic. Several people in the San Diego tech industry complained to the U-T. How could it permit such a reactionary to write such things? In the real estate boom, few people pointed out that the extension of mortgages was out of hand. Many knew prices were wacko, but few complained that people were getting mortgages they couldn't afford. I remember writing in 2004 that a lot of these mortgages were crazy, but I admit I should have been writing about it earlier. Best, Don Bauder

0

Sign in to comment

Join our
newsletter list

Enter to win $25 at Broken Yolk Cafe

Each newsletter subscription
means another chance to win!

Close