Ask me about the economic crisis

Specifically, relating to the U.S. (although it is all related). I work in the accounting field and am starting grad school for a masters degree in it, and I have been interested in economics for a while. I am no expert, but I am more knowledgeable than most on economic topics, and I know a lot of people don't have any clue what is going on right now in our economy. Ask me anything and I will do my best to explain it, how I believe it to be, in a way that is easy for everyone to understand without prior knowledge in this field.

carter's policies or simple corporate greed?

why does the economy cause wendys to make terrible commercials

Oh boy, here we go. Scarf, you realize that you are about to be flooded with, "America is in an economic crisis because capitalism is from the devil and socialism is the only acceptable and fair market structure and if you disagree you are greedy, lazy, and smell bad" posts, right?

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Originally Posted by sycld

carter's policies or simple corporate greed?

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Funny thing - I actually spent a summer of college interning at a 2-person law firm, and one of the partners there was Carter's cabinet director of the Office of Budget and Management (not the one who resigned) and he is a very wise and honest fellow so while I don't know a lot about Carter's policies, I am confident his brainstormer at least knew what he was doing.
I think corporate greed plays a large role in the general problems of lending (or not lending), policies that screw the consumer etc but I don't think the overall monetary policy was set up with corporate greed in mind. Sure, special interests affected the laws with an adverse proportion, but overall the laws were pretty fair. It's the things that laws didn't cover that got us in this situation - repackaging securities and allowing the Fed to have free reign over interest rates, to name a couple things.

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Originally Posted by raghead

why does the economy cause wendys to make terrible commercials

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Because Dave is dead and Wendy is a red-headed slut so no one is left to properly direct the commercials.

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Originally Posted by Mr. E

Oh boy, here we go. Scarf, you realize that you are about to be flooded with, "America is in an economic crisis because capitalism is from the devil and socialism is the only acceptable and fair market structure and if you disagree you are greedy, lazy, and smell bad" posts, right?

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How is socialism fair? It completely regulates private business.
I am in favor of free markets, if companies are going down the tubes let them fail. If companies are doing well, let them do well. Aside from cases like the Ma Bell breakup, I don't think the government should interfere at all and let the market play itself out. The biggest problem though isn't over-regulation, it is the Federal Reserve banking system. A pseduo-private company has absolute authority over lending and interest rates, essentially giving a non-governmental agency the authority to print money. We're already at 0-.25% interest, the next step is quantitative easing to try to get banks to lend their bailout money, but if that doesn't work then our dollar will devalue very quickly.
Here is a very good video explaining quantitative easing, if you have a few minutes I suggest you check it out: http://marketplace.publicradio.org/v...e_easing.shtml That site has several other good economic videos as well.

Oh I completely agree with you scarfy (we've actually talked about this before). I was just warning you what you are going to have to deal with as soon as a certain set of posters sees this thread.

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Originally Posted by Mr. E

Oh I completely agree with you scarfy (we've actually talked about this before). I was just warning you what you are going to have to deal with as soon as a certain set of posters sees this thread.

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The nice thing about economics is it is largely theory-based, so me arguing for the side of Austrian economics (which I don't really know anything about to be honest, I just picked a kind of random example of a subject that interests me) is great as long as I am able to back up what I am saying. I welcome different viewpoints and debate in this thread, however I don't think the usual suspects in this forum will be able to actually back up anything they spout without sound theory to support their claims.

Why should I care?

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Originally Posted by Pepsi

Why should I care?

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If you (or your parents, if you depend on them for a roof over your head) have money in investments, I need say no more - you're feeling it right now. Many people that were going to retire in 2-3 years now project to have to work 10 more years instead.

There is also the issue of social responsibility, you should care because there was only about a 10-20% approval in polls for the first bailout, but lawmakers didn't listen to their constituents and instead did what they wanted. Politicians are so entangled in the system they can't really go too far against the grain so they basically support whatever they are told to in order to keep in favor with their party.

Oh also the fact that our government doesn't have all this money to begin with so you and your grandchildren and probably their children will be paying for all of this. (secret: we are borrowing heavily from China)

Economics won't affect the auction house prices right?

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Originally Posted by Janglez

Economics won't affect the auction house prices right?

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Depends what it is in regards to. I would figure it wouldn't factor in too much though since you are dealing with already depreciated assets for the most part that don't have overly inflated values.

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Originally Posted by Rick Scarf

If you (or your parents, if you depend on them for a roof over your head) have money in investments, I need say no more - you're feeling it right now. Many people that were going to retire in 2-3 years now project to have to work 10 more years instead.

There is also the issue of social responsibility, you should care because there was only about a 10-20% approval in polls for the first bailout, but lawmakers didn't listen to their constituents and instead did what they wanted. Politicians are so entangled in the system they can't really go too far against the grain so they basically support whatever they are told to in order to keep in favor with their party.

Oh also the fact that our government doesn't have all this money to begin with so you and your grandchildren and probably their children will be paying for all of this. (secret: we are borrowing heavily from China)

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We aren't invested in anything. Now what do I do?

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Originally Posted by Pepsi

We aren't invested in anything. Now what do I do?

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Invest in growth stock mutual funds by looking for a track record of 5-10+ years of good growth. Don't worry about short term performance, look at the long term of a fund that has been around for a while. Don't invest anything you will need anytime soon, you won't want to touch anything in there for at least 5 years, just keep throwing money in it every month forever.
The market has bottomed out so now is an excellent time to invest in it.

Pay off your debts if any, live below your means and save the rest. 6 months of expenses for an emergency fund in easily accessible cash funds, put the rest towards IRA, 401k, savings etc.

How long do you think the recession will last? Many say deep into 2010 but I am frightened it could go longer.

Start investing, fuckwit.

The most pertinent question, Scarf, is: why have property values gone done, but property taxes gone up?

Also you were a bit misleading because unless you are the victim of predatory lending, are on a fixed income based on investment returns, plan to retire in the next year, or invested heavily in a company that is being allowed to fail (ie. not receiving a bailout like its competitors) and are therefore an idiot for not diversifying your portfolio, or are at risk of losing your job, this will not affect you much. Plan to skip the family vacation this year.

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Originally Posted by Rick Scarf

Depends what it is in regards to. I would figure it wouldn't factor in too much though since you are dealing with already depreciated assets for the most part that don't have overly inflated values.

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Thank god.

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Originally Posted by Kal El

How long do you think the recession will last? Many say deep into 2010 but I am frightened it could go longer.

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Why? Why? Why? Why?

People seem to forget that the early 1930s were great years on Wall Street.

Honestly, no one has any solid answer to that, it's all speculation. If banks start lending regularly again tomorrow, we'll be patched up and good to go within 6 months and we'll probably burst this bubble again in 5-20 years because it wasn't fixed right this first time.
If banks don't lend and the Fed prints more money, and that works, we'll be out of it in 1-2 years, again though, we'll crash again down the road.
If the Fed prints money and lenders still don't trickle down, we're pretty much fucked, our dollars shits its pants and we'll have the modern equivalent of bread lines by summer next year and it will be a decade or so of recovery.

Everything they are doing now though I think is only a band-aid to the larger problems. Even if things go well and we recover, we're going to be at this door again in a decade or two.

Some experts advise buying gold, I don't personally like that idea though because if the dollar crashes what good does gold do, you can't exactly trade it for food because we are a fiat-based society (we are slave to the almighty dollar).

Being a slave to the dollar isn't a bad thing though. Commodity money is impractical and imo would be even less stable than the fiat currency most of the world uses (especially in times like right now).

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Originally Posted by Atmosfear

Start investing, fuckwit.

The most pertinent question, Scarf, is: why have property values gone done, but property taxes gone up?

Also you were a bit misleading because unless you are the victim of predatory lending, are on a fixed income based on investment returns, plan to retire in the next year, or invested heavily in a company that is being allowed to fail (ie. not receiving a bailout like its competitors) and are therefore an idiot for not diversifying your portfolio, or are at risk of losing your job, this will not affect you much. Plan to skip the family vacation this year.

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To your first questions, property values have gone down because the housing market was artificially inflated due to interest rates set by the Fed. Many lenders got laymen excited about things like adjustable rate mortgages, and when they adjust up even just a little bit of a percent, all of a sudden people can no longer afford their mortgage payments. I wasn't aware of property taxes going up significantly, but I would imagine if they have it would be because local governments are feeling the crunch of their own loans going uncollected, lowered revenues from things like fuel taxes etc. When the gas prices dropped, in Indiana for example they predicted a $400 million shortfall in the budget for roadwork because they weren't getting as much fuel tax revenue anymore. Raising property taxes would be one way to partially counteract that.

To the latter part of your post, you forget that even if YOU are doing everything perfectly, your employer is feeling the crunch and may just have to lay you off. Then what? Not having a job and being in an economy when few companies are hiring makes it hard to pay for that house and two cars.

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Originally Posted by Mr. E

Being a slave to the dollar isn't a bad thing though. Commodity money is impractical and imo would be even less stable than the fiat currency most of the world uses (especially in times like right now).

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The problem with the gold standard idea is there isn't enough physical gold for our modern day population. Cash money is nice because it is easily portable, easily recognizable and legally accepted for any debt public or private. The problem comes when they print more money than the market truly needs (due to saving or investing in treasury bonds by banks.. why not take that .25% loan and buy guaranteed 2% treasury bonds?) and even worse if that agency responsible has little actual government regulation. Don't be fooled, folks - the Federal Reserve is a private company, authorized to exist by Congress, but it is not authorized by the Constitution and other than their charter being approved by Congress, they have basically no government oversight.

We have no money.

Literally.

All of it has been drained by the fact that there are no jobs in this area and they won't give my parents disability even though their doctors say they qualify for it. We've also had to use the remainder of our cash to pay for repairs to this house because it's a fucking shithole.

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Originally Posted by Rick Scarf

The problem with the gold standard idea is there isn't enough physical gold for our modern day population. Cash money is nice because it is easily portable, easily recognizable and legally accepted for any debt public or private. The problem comes when they print more money than the market truly needs (due to saving or investing in treasury bonds by banks.. why not take that .25% loan and buy guaranteed 2% treasury bonds?) and even worse if that agency responsible has little actual government regulation. Don't be fooled, folks - the Federal Reserve is a private company, authorized to exist by Congress, but it is not authorized by the Constitution and other than their charter being approved by Congress, they have basically no government oversight.

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Yep.....

lol, I have no business itt. I know every fact you are giving me and agree with everything you are saying. This thread is not for me :(.

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Originally Posted by Pepsi

We have no money.

Literally.

All of it has been drained by the fact that there are no jobs in this area and they won't give my parents disability even though their doctors say they qualify for it. We've also had to use the remainder of our cash to pay for repairs to this house because it's a fucking shithole.

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Sounds like you probably don't have adequate health insurance either, so you're in a pretty bad place. Best thing I could tell you is to make every dollar count, live by a strict budget and work hard, whether you deliver some pizzas or mow lawns, and pay for enough stuff to keep the lights on, food on the table and a roof over your head, and save the rest. Don't worry about investing for a long time, just save money in a regular savings account for a while.

So, Rick Scarf, how bout that economic crisis?

I graduate (and get a BA in Math, minor in Computer Science) in May. I've had 1 job offer already (in Florida), and 2 more (one in Idaho, where I live, and one in Texas). I'm also applying for a job in California (at Google yay!). The whole economic crisis hasn't affected me in any way other than I pay less for gas now(yay more beer), mainly because my student loans don't accumulate interest until I graduate and I've already paid off my car.

Do you have any advice for what I should currently be doing? The job in Florida would only be a 3-4 month job, but I'd likely make $15k (it's all commission). I doubt I'll actually do it unless I don't get any of the other jobs. The Texas job would be sweet, but I don't know anything about when I'd start if I'll actually get the job. The Idaho job offer was a "call me when you graduate" type of job working for the state Auditor. I can't be certain that job's still available for me because of the current situations, but I'll likely give her a call anyway.

Anyway, I currently have all my debts paid (other than $10k in student loans) and no plan past mid-June. I currently live on about $200/month (scholarships pay my room and board). Any words of wisdom? I don't make a terribly large amount more than I spend, but should I start investing even if it's only $50 or $100/month or should I just throw it in a savings account?

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Originally Posted by MotoXRider31

what to do?

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I would recommend you follow the patented Dave Ramsey plan, and follow at least the first couple of his baby steps:

Step 1: Put aside $1000 in a cash (savings account) fund for emergencies
Step 2: Pay off debts, smallest to largest - that means hit your student loan hard

You can start putting some stuff into mutual funds if you want (I do an automatic withdraw every month straight off my paycheck) but keep the main focus on paying off that student loan. When it's paid off you can breathe easy and know that every dollar you make is actually your dollars once again! Sounds like you're in a good position to do well, just remember the magic of compound interest - the more you can invest when you're young will be worth so much more when you're older.

If you're hitting your loan with $100 or more a month, and still have an extra $50 a month, I'd throw it into a 401k if you have one with your employer, or even at least a money market account for the time being until you have a 401k, then roll that money market amount into your 6 month emergency fund that you'll want to develop once the loan is paid in full.

Obviously it's smarter to invest in a mutual fund even if it's only for 6 months and then start paying off the student loan because of the whole no interest situation. I don't think I have a 401k program with my employee because I'm paid by student fees (yay for being in student goverment). So who should I talk to about a mutual fund? Turns out I don't know much about them at all. Perhaps I should take an economy class before I graduate.

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Originally Posted by Rick Scarf

Sounds like you probably don't have adequate health insurance either, so you're in a pretty bad place. Best thing I could tell you is to make every dollar count, live by a strict budget and work hard, whether you deliver some pizzas or mow lawns, and pay for enough stuff to keep the lights on, food on the table and a roof over your head, and save the rest. Don't worry about investing for a long time, just save money in a regular savings account for a while.

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Actually, the state pays for everything healthcare wise. It's been that way for about 7 years.

Oh the bliss.

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Originally Posted by Pepsi

Actually, the state pays for everything healthcare wise. It's been that way for about 7 years.

Oh the bliss.

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lol

Just google for mutual funds. There used to be a video, but I think there is just an mp3 now at https://www.mytotalmoneymakeover.com...trl=daveramsey about what mutual funds are exactly.
Basically, you pool your money ("mutually") with a bunch of other people and the fund managers invest in whatever that fund's goals are, be it international or domestic funds, or a mix of both. They professionally manage all that money and sometimes takes a small fee for that service. I use Fidelity because we're set up with them at work and I've been pleased so far with their web site and ease of use.

If you're only going to invest for 6 months, stick to a money market or even a regular savings account (you can search online for higher yield savings accounts). The market is far too volatile to get tied up in a mutual fund for only 6 months, these things take years to develop into good investments as they roll up and down with the markets, but gradually grow over time.

If you do want to get into mutual funds though and don't know where to start, try calling one of the Endorsed Local Providers that you can find on the link above. I don't have any personal experience using ELPs but I trust Dave Ramsey as a pretty legit dude that would only link to people that were good folks who would sit down with you and actually teach you about what the investments entail.

I don't mean this as a criticism of you, specifically, Scarf, but getting information from only one or only a few sources about the crisis OR indeed economics in general is pretty fucking stupid, because you'll be getting their political and ideological bias along with all that handy dandy information.

I just wanted to make sure that was said somewhere in this thread. CARRY ON

How does it affect Britain?

I should note I know next to nothing about any of this, and I feel very ashamed of that. Explain it as slowly and loudly as you can.

I feel the way as Mang, and after reading what you said about now being a good time to invest for the long term, how would I go about doing this in the UK?

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Originally Posted by gwahir

I don't mean this as a criticism of you, specifically, Scarf, but getting information from only one or only a few sources about the crisis OR indeed economics in general is pretty fucking stupid, because you'll be getting their political and ideological bias along with all that handy dandy information.

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I'm going to have to disagree with you gwahir. This isn't a discussion over which economic system is better or whether or not any economic system is going to fail, it is just a discussion of the best course of action to be taken given the exact situation we are in. The theory is pretty universal when you're not arguing the merits of the system.

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Originally Posted by Mang

Explain it as slowly and loudly as you can.

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BRITONS ARE LIKE AMERICANS IN THAT THEY HAVE UP UNTIL THIS CRISIS HAD A CULTURE OF BUYING SHIT ON CREDITWELL NOW THE DAYS OF CHEAP CREDIT ARE OVER AND MANY BRITONS ARE HEADING INTO PERSONAL BANKRUPTCY AS THEY ARE UNABLE TO PAY OFF THEIR MORTGAGES AND DEBTS

i hope that was loud enough for you.

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Originally Posted by gwahir

I don't mean this as a criticism of you, specifically, Scarf, but getting information from only one or only a few sources about the crisis OR indeed economics in general is pretty fucking stupid, because you'll be getting their political and ideological bias along with all that handy dandy information.

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Additionally to what Mr. E said about this, getting even one person's perspective on something is informative at the least. Similarly to watching CNN or Fox :huhu: to learn about current situations, Scarf is giving us the crisis as he sees it. I thought it was apparent that when asking a question it was obvious that that's what you'd get.

Regardless, getting any information is good if you ask me.

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Originally Posted by sycld

i hope that was loud enough for you.

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I think the loudness was satisfactory, but in my honest opinion it could well have been slower.

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Originally Posted by Mr. E

I'm going to have to disagree with you gwahir. This isn't a discussion over which economic system is better or whether or not any economic system is going to fail, it is just a discussion of the best course of action to be taken given the exact situation we are in. The theory is pretty universal when you're not arguing the merits of the system.

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The problem is that someone in your position can take certain facts for granted and not use them in a discussion, but someone ELSE might find those facts pertinent if they knew about them. Bias is inevitable in that it dictates what data you present and what you leave out.

Will the current situation raise/lower/unalter my frequency of getting laid? Also, will women tend to be more kinky in bed during these times?

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Originally Posted by ShitFace

I feel the way as Mang, and after reading what you said about now being a good time to invest for the long term, how would I go about doing this in the UK?

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I honestly don't know the details of investing in the UK, but to address Mang's question I think that the EU as a whole has been following the same financial principles of the U.S. but at least they have the luxury of being a bit "behind the curve" so if the people in charge of your monetary policy are smart, they make quick changes when our economy started tanking, but I doubt they did and I would guess you guys will be in the same shape we are with bailouts and rising unemployment in several months. I am not of the mindset of the U.S. is the end all and be all of the world, at all, but to be truthful our own economy is complicated enough so I have not devoted any time to reading up on what is happening in your part of the world. Sound financial advise that will work anywhere though, including for you, would be to not buy shit you can't afford, live within your means and save money for a rainy day.

It rains a lot here remember :(

Thanks for the insight though.

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Originally Posted by UnreasonablyReasonable

Will the current situation raise/lower/unalter my frequency of getting laid? Also, will women tend to be more kinky in bed during these times?

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Funny you should ask...

One sex toys website actually reported an increase of sales. They attribute this to the fact that couples have less money to go out, so many are opting instead to find entertainment in the house (read: "in bed"), and sex toys are a relatively cheap way to spice things up.

Some people actually think an increase in births is possible in the near future.

In other news, the porn industry just asked for a 5 billion dollar bail out.

Link?

http://www.ajc.com/business/content/...n_bailout.html