The great depression of 2008 - Aussie Stock Forums

Results 1 to 5 of 5
  1. #1

    Default The great depression of 2008

    Headlined on 7/15/08:
    The Great Depression of 2008

    by Marc McDonald Page 1 of 2 page(s)



    Until last week, most economists were divided on whether the U.S. was in a recession or not. Now, with the ailing mortgage agencies Fannie Mae and Freddie Mac on the ropes, it's clear that what's unfolding is far worse than any recession.

    As Britain's normally staid The Telegraph newspaper notes, we could be on the verge of a new Great Depression. That might seem far-fetched until you consider that last month, the Dow suffered its worst June since 1930.

    But The Telegraph is hardly alone in using such apocalyptic language these days. The "D" word is starting to be mentioned more and more in the business media, as well as by economic commentators. As David Bullock, managing director of investment fund Advent Capital Management, put it in a comment to The New York Times on Tuesday, "We are closer to the Depression scenario than not."

    Yes, a real Depression, complete with tent cities now springing up in what once were prosperous suburbs.

    This doom-and-gloom language in describing the U.S. economy first began to pick up steam after investment bank Bear Stearns had to be bailed out by the government in May. In describing the bailout, the Associated Press said that Bear Stearns was "On the verge of a collapse that could have shaken the very foundations of the U.S. financial system."

    The current crisis with Fannie Mae and Freddie Mac is infinitely larger than Bear Stearns. The two companies either hold or guarantee a staggering $5.3 trillion worth of mortgages. Indeed, the investment magazine MoneyWeek has noted that the crisis is big enough to doom the dollar.

    As MoneyWeek notes:

    Fannie Mae and Freddie Mac might have been deemed too big to fail---but who's big enough to bail out the US? When investors start seriously asking themselves that question, expect the dollar to plunge.

    Make no mistake, a catastrophic U.S. economic collapse is on the way. Such is the inevitable fate of any Ponzi scheme economy that has been running on nothing more than smoke and mirrors (and oceans of foreign capital) now for many years.

    Of course, those who are poor or working class know first-hand that the U.S. economy has been in increasingly serious trouble since around 1980. Wages have been steadily declining for everyone but the very rich. And working class people now toil more hours for less pay than their counterparts in any other First World nation. (They have to, as a 40-hour workweek no longer is enough to put groceries on the table).

    But as long as America had a tiny elite of prosperous super wealthy, we could always point to them and try to convince ourselves that our economy couldn't be all bad. After all, we would note, there are some people out there making a fortune. All it takes is hard work and ambition, right?

    Today, with the stock market in the toilet, and the Fed having to step in to bail out the financial sector, it should be clear to anyone that the U.S. economy is in crisis.

    If the U.S. economy actually produced anything of value, this would be nothing more than just another typical downturn in the economic cycle.

    The problem is, the U.S. economy no longer produces anything of value. Our economic activity basically consists of importing trillions of dollars from central banks in East Asia---which we then use to prop up our Ponzi scheme economy. The ocean of foreign capital that flows into our nation daily is used to pay for the shopping habits of U.S. consumers.

    In fact, in recent years, the Great American Consumer has been hailed by U.S. economists as the "locomotive" of the world economy. There was only one problem: U.S. consumers had zero savings and were depending on foreign capital to finance their shopping binges.
    Now, with the stock market crisis and the ongoing housing mortgage crisis, nobody is in much of a mood to do any spending these days. And with the dollar rapidly declining, it's only a matter of time before the East Asian central banks start to unload their depreciating greenbacks (which will accelerate the dollar's fall even further in a vicious cycle).

    The frightening thing is that East Asian central banks haven't even begun seriously dumping their dollars and yet the dollar is already plunging.

    And the dollar has already lost an astonishing 40 percent against an index of U.S. trading partners' currencies over the past seven years.

    The key numbers which measure the current U.S. economic crisis are so far off the chart that it is difficult to even fathom them. As economics writer Eamonn Fingleton has noted, the U.S. current account deficit (the widest and most meaningful measure of our trade position) now represents an astounding 6.5 percent of our gross domestic product.

    As Fingleton notes, only one other major nation has ever exceeded this figure: Italy in 1924. That was just before Benito Mussolini seized dictatorial power.

  2. #2

    Default Re: the great depression of 2008

    Tent city in suburbs is cost of home crisis

    Subprime woes plague California

    By Dana Ford

    ONTARIO, California (Reuters) - Between railroad tracks and beneath the roar of departing planes sits "tent city," a terminus for homeless people. It is not, as might be expected, in a blighted city center, but in the once-booming suburbia of Southern California.

    The noisy, dusty camp sprang up in July with 20 residents and now numbers 200 people, including several children, growing as this region east of Los Angeles has been hit by the U.S. housing crisis.

    The unraveling of the region known as the Inland Empire reads like a 21st century version of "The Grapes of Wrath," John Steinbeck's novel about families driven from their lands by the Great Depression.

    As more families throw in the towel and head to foreclosure here and across the nation, the social costs of collapse are adding up in the form of higher rates of homelessness, crime and even disease.

    While no current residents claim to be victims of foreclosure, all agree that tent city is a symptom of the wider economic downturn. And it's just a matter of time before foreclosed families end up at tent city, local housing experts say.

    "They don't hit the streets immediately," said activist Jane Mercer. Most families can find transitional housing in a motel or with friends before turning to charity or the streets. "They only hit tent city when they really bottom out."

    Steve, 50, who declined to give his last name, moved to tent city four months ago. He gets social security payments, but cannot work and said rents are too high.

    "House prices are going down, but the rentals are sky-high," said Steve. "If it wasn't for here, I wouldn't have a place to go."


    Nationally, foreclosures are at an all-time high. Filings are up nearly 100 percent from a year ago, according to the data firm RealtyTrac. Officials say that as many as half a million people could lose their homes as adjustable mortgage rates rise over the next two years.

    California ranks second in the nation for foreclosure filings -- one per 88 households last quarter. Within California, San Bernardino county in the Inland Empire is worse -- one filing for every 43 households, according to RealtyTrac.

    Maryanne Hernandez bought her dream house in San Bernardino in 2003 and now risks losing it after falling four months behind on mortgage payments.

    "It's not just us. It's all over," said Hernandez, who lives in a neighborhood where most families are struggling to meet payments and many have lost their homes.

    She has noticed an increase in crime since the foreclosures started. Her house was robbed, her kids' bikes were stolen and she worries about what type of message empty houses send.

    The pattern is cropping up in communities across the country, like Cleveland, Ohio, where Mark Wiseman, director of the Cuyahoga County Foreclosure Prevention Program, said there are entire blocks of homes in Cleveland where 60 or 70 percent of houses are boarded up.

    "I don't think there are enough police to go after criminals holed up in those houses, squatting or doing drug deals or whatever," Wiseman said.

    "And it's not just a problem of a neighborhood filled with people squatting in the vacant houses, it's the people left behind, who have to worry about people taking siding off your home or breaking into your house while you're sleeping."

    Health risks are also on the rise. All those empty swimming pools in California's Inland Empire have become breeding grounds for mosquitoes, which can transmit the sometimes deadly West Nile virus, Riverside County officials say.


    But it is not just homeowners who are hit by the foreclosure wave. People who rent now find themselves in a tighter, more expensive market as demand rises from families who lost homes, said Jean Beil, senior vice president for programs and services at Catholic Charities USA.

    "Folks who would have been in a house before are now in an apartment and folks that would have been in an apartment, now can't afford it," said Beil. "It has a trickle-down effect."

    For cities, foreclosures can trigger a range of short-term costs, like added policing, inspection and code enforcement. These expenses can be significant, said Lt. Scott Patterson with the San Bernardino Police Department, but the larger concern is that vacant properties lower home values and in the long-run, decrease tax revenues.

    And it all comes at a time when municipalities are ill-equipped to respond. High foreclosure rates and declining home values are sapping property tax revenues, a key source of local funding to tackle such problems.

    Earlier this month, U.S. President George W. Bush rolled out a plan to slow foreclosures by freezing the interest rates on some loans. But for many in these parts, the intervention is too little and too late.

    Ken Sawa, CEO of Catholic Charities in San Bernardino and Riverside counties, said his organization is overwhelmed and ill-equipped to handle the volume of people seeking help.

    "We feel helpless," said Sawa. "Obviously, it's a local problem because it's in our backyard, but the solution is not local."


  3. #3

    Default Re: the great depression of 2008

    the homeless. and i think this vid is over 6 months old. imagine how many more people are homeless all over the states....


  4. #4

    Default Re: The great depression of 2008

    Add to the list of problems peak oil in a country where everything depends on it being cheap, a peak in domestic gas production and infrastructure that's already stretched to breaking point (and rapidly wearing out) and it doesn't look too good for the US.

    How are they going to afford the fortune needed to change, repair and replace when they're already broke?

  5. #5

    Default Re: The great depression of 2008

    with the ever growing US debt http://zfacts.com/p/461.html
    plus their infatuation with fighting and war, and spending billions, trillions, to finance those wars, and always at the expense of not attending to their own domestic issues, my vision of the US for the future is a nation that "WILL" be brought to its knees, its just a matter of time.

    after all, if i decided it was a good idea to repeatedly, intimidate and fight with the neighbors in my street, plus run up enormous debts that i cant afford, then it wont be long before my little house of cards comes tumbling down.

    its the same for a nation, the process is merely protracted

Similar Threads

  1. ASX Sharemarket Game 2008
    By rowes in forum Beginner's Lounge
    Replies: 119
    Last Post: 9th-March-2010, 01:42 PM
  2. ASX Trading calendar - 2008
    By bigdog in forum ASX Stock Chat
    Replies: 3
    Last Post: 10th-March-2008, 09:33 AM
  3. Stock selection for 2008
    By nitpra in forum ASX Stock Chat
    Replies: 7
    Last Post: 13th-January-2008, 08:51 AM
  4. AFR Top 20 for 2008 .....
    By Trader Paul in forum ASX Stock Chat
    Replies: 0
    Last Post: 6th-January-2008, 01:51 PM
  5. Great Myths of the Great Depression
    By wayneL in forum International Markets
    Replies: 5
    Last Post: 19th-May-2005, 04:06 PM


Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
Aussie Stock Forums