Things are getting pretty scary in the economy right now.
Personally, one of the things I've been thinking about a lot is the fact that many near-to-retirement workers are pushing off their retirement timeline by 5-10 years in many cases. AND, there's a big shift happening right now where recently-retired people are returning to the workforce.
Considering the unemployment rate is increasing (and will continue to increase as more companies collapse or cut back) what this all means is: less jobs and more workers fighting for less jobs. Basic supply/demand will tell you that it then follows that wages will be pressured lower.
If wages are lower, and more people are unable to find jobs, what do you think that means to consumer spending? Big cut backs, and prolonged cut backs.
Less spending hurts companies, who eventually need to layoff employees or shut down. Which adds to the unemployment rate... start reading 2 paragraphs above again to see the cycle.
Yikes. Right?
And... what does this all mean to upcoming college grads? Well it's not positive news.
And and, what does this mean to newer entrants into the workforce? It doesn't mean year end bonuses, and hefty year-after-year promotions/salary increases.
And and and, if younger people (above 2 paragraphs) are therefore hurting, who becomes the next wave of new home buyers? And without new homebuyers, how do others move up the property ladder so that the housing market can begin to correct itself?
ugly ugly ugly
anyhow, I find it really interesting to talk about this topic. Would be interested to hear your take on this whole mess. Would also be very interested to specifically hear the impact outside of the US since I have not had a chance to study that as much at this point.
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also, anyone else besides me read Teresa Ghilarducci's 401K overhaul proposal? (and I don't mean "have you read propaganda about her plan", I mean "have you actually read her full proposal all the way through"... becaues the editorials on her plan leave out major, and important pieces of information)
more economy talk
more economy talk
Bob R.
Apparently, Americans eat SPAM during recessions as a way to stretch their food dollar: http://www.nytimes.com/2008/11/15/busin ... am.html?em
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slapdash21
- Futureless
- Posts: 4681
- Joined: 29 Sep 2004 14:50
- Location: Beantown, kidd
In some ways, I can't disagree with the logic behind going into a trade vs. spending on college. Trades can often be learned at the high school level, and your earning years start sooner, and you generally have lower debt to start the game with.
Then again, the high end earning power in the trades is generally far lower than what you can earn in many careers that require a college degree. YES, there are exceptions to this rule, but generally speaking..
Also, your commments don't really address today's economy, just more of a commentary on what the next generation might be able to do.
Also also, funny article Ken, but don't go derailing this conversation ha ha
Then again, the high end earning power in the trades is generally far lower than what you can earn in many careers that require a college degree. YES, there are exceptions to this rule, but generally speaking..
Also, your commments don't really address today's economy, just more of a commentary on what the next generation might be able to do.
Also also, funny article Ken, but don't go derailing this conversation ha ha
Bob R.
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BainbridgeShred
- Post Master General
- Posts: 2352
- Joined: 10 Nov 2004 23:22
Demand. It's just a market like any other. Theoretically you can offer to buy or sell shares at any price. The more people who want to buy shares, the more you can charge and still sell them. Similarly the less people who want to buy them, the lower you have to offer to still be able to sell them - normal supply and demand.
The real complicated issue is what makes people want to buy or sell shares. There are all kinds of reasons, some based on how the actual business is performing, but many not.
Regarding the economy - things are certainly a lot better in Australia than in the US, but even in the US I don't think things are nearly as bad as people are making out. The positive feedback loop that Rieferman talks about in his post (rising unemployment leading to less consumer spending leading to rising unemployment etc.) isn't going to be too bad because less consumer spending leads to less inflation which leads to falling prices and lower interest rates which leads to lower costs of living. Think for example, how a beer costs so much less in a poor country than a rich country. A Tiger Beer costs less than $1 in a bar in Thailand and about $6 to $8 in a bar in Australia.
There's obviously a delay between cutting spending and lowering the cost of living, and so there will obviously be some hardship, but it's also pretty clear that the crisis is not as bad as some people are making it out to be. Our standard of living in the Western World is still by far the highest it has ever been in the history of humanity.
The real complicated issue is what makes people want to buy or sell shares. There are all kinds of reasons, some based on how the actual business is performing, but many not.
Regarding the economy - things are certainly a lot better in Australia than in the US, but even in the US I don't think things are nearly as bad as people are making out. The positive feedback loop that Rieferman talks about in his post (rising unemployment leading to less consumer spending leading to rising unemployment etc.) isn't going to be too bad because less consumer spending leads to less inflation which leads to falling prices and lower interest rates which leads to lower costs of living. Think for example, how a beer costs so much less in a poor country than a rich country. A Tiger Beer costs less than $1 in a bar in Thailand and about $6 to $8 in a bar in Australia.
There's obviously a delay between cutting spending and lowering the cost of living, and so there will obviously be some hardship, but it's also pretty clear that the crisis is not as bad as some people are making it out to be. Our standard of living in the Western World is still by far the highest it has ever been in the history of humanity.
Jeremy, I agree with your comments about inflation being lower at a time like this (and the effect that lower inflation has), but it's the hardship period that you mention that's the concern. In past/recent recessions, the hardship period has been measured in months, but many are starting to hedge towards measuring in years this time around. If a recession (depression) is deep enough and long enough, lower prices can't undo things as quickly.
I agree with you that it's not yet as bad as the news would have you think, but I can see scenarios where it gets pretty bad. I'm not talking millions standing in line at soup kitchens (ha ha, I just remembered your soup pictures), but I am talking about a significant and long lasting change in some areas that many of us have taken for granted for a long long time.
Also, further down the road... What do we do later on for everyone that's been using their 401K's to make ends meet right now.
I agree with you that it's not yet as bad as the news would have you think, but I can see scenarios where it gets pretty bad. I'm not talking millions standing in line at soup kitchens (ha ha, I just remembered your soup pictures), but I am talking about a significant and long lasting change in some areas that many of us have taken for granted for a long long time.
Also, further down the road... What do we do later on for everyone that's been using their 401K's to make ends meet right now.
Bob R.
Here is a good NYTimes article that describes some of the irrational behavior of consumers. I found it very interesting how we as consumers try and act rationally, but sometimes cannot.
This whole thing stinks of.... "Oh no! I won't be able to afford all those trips to St Lucia and Thailand in the next five years, and I may have to buy a sesnsible car and not put myself into a million dollar mortgage."
Chin up bitches. I'm poor and its not so bad. I'm sure the reality shock would do our culture well. All this entitlement is making me sick.
Chin up bitches. I'm poor and its not so bad. I'm sure the reality shock would do our culture well. All this entitlement is making me sick.
Ken - those people are idiots.
Actually, the wife of one of my close friends is totally one of the idiots. She honestly thinks she's so frugal by playing the "CVS Game" where you use bonus points and coupons at CVS (which is a chain of pharmacies / convenience stores in the US) to get "great deals". She was so pleased with herself that she started a blog just to brag about her successes. When I pointed out to her that she drives twice as far to get to the CVS, and that the pricing she was getting was no better than at a standard discount grocery store, and that there's no reason to have a 2 year's supply of tooth paste, she just scratched her head and looked confused.
So I guess.. Yeah, there are a lot of idiots out there.
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Slowsis
I don't think I know you, so I won't judge just based on one comment. But, your comment would be considered pretty presumptuous (and clearly ignorant frankly) to many people who find themselves in very bad shape in this economy. It's a "free forum" so continue to comment if you like, but I'd prefer informed replies in this thread if I had a choice.
Actually, the wife of one of my close friends is totally one of the idiots. She honestly thinks she's so frugal by playing the "CVS Game" where you use bonus points and coupons at CVS (which is a chain of pharmacies / convenience stores in the US) to get "great deals". She was so pleased with herself that she started a blog just to brag about her successes. When I pointed out to her that she drives twice as far to get to the CVS, and that the pricing she was getting was no better than at a standard discount grocery store, and that there's no reason to have a 2 year's supply of tooth paste, she just scratched her head and looked confused.
So I guess.. Yeah, there are a lot of idiots out there.
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Slowsis
I don't think I know you, so I won't judge just based on one comment. But, your comment would be considered pretty presumptuous (and clearly ignorant frankly) to many people who find themselves in very bad shape in this economy. It's a "free forum" so continue to comment if you like, but I'd prefer informed replies in this thread if I had a choice.
Bob R.
Its just that "bad shape" by our standards is the lap-of-luxury for millions of people around the planet. Even though I can't imagine what its like to be in those peoples shoes, I could imagine if they saw the panic that people here are going into, even though we are never going to have to worry about food on their plate or clean water to drink, they would laugh at us like the spoiled westerners that we are. I'm sorry for making a joke of it, but I perfer to be light-hearted, and because for our perspective as westerners, it IS a really big deal if our economy is in bad shape, and I can understand why my remark may have come across as ignorant.
I also don't want to come across as speaking down to people who are very stressed about the situation. I'm a business student, and if things continue the way they are going, I may be out of a job and loaded with debt the second I get out of college. I don't want my standard of life to drop even one notch, and so share the stress and worry of the American populace.
That said, I'm not joking about the entitlement part. We are LUCKY to be able to worry about the fact that we might not be able to get a good job or afford the luxury of the last few decades. Thats a fact. At least my future child won't die at birth due to lack of medical technology, or poor nutrition.
I also don't want to come across as speaking down to people who are very stressed about the situation. I'm a business student, and if things continue the way they are going, I may be out of a job and loaded with debt the second I get out of college. I don't want my standard of life to drop even one notch, and so share the stress and worry of the American populace.
That said, I'm not joking about the entitlement part. We are LUCKY to be able to worry about the fact that we might not be able to get a good job or afford the luxury of the last few decades. Thats a fact. At least my future child won't die at birth due to lack of medical technology, or poor nutrition.
I agree in sentiment with Adam. The amount of disproportionate affluence, consumption and hedonism is pretty disgusting in the Western world. In Australia the average size of houses has doubled in the last 40 years despite the average size of families falling. Both Australians and North Americans grossly over consume and the Western World is almost entirely responsible for global warming (because it's caused by total carbon eq. concentration, not current rate of emissions). Our society is currently completely unsustainable and it's therefore inevitable that we're either going to have to drastically reduce our consumption by choice, or it's going to be forced on us.
That said, with any crisis, be it an economic crisis like this, a political crisis or an environmental crisis like global warming, the people most vulnerable are the poorest people, and the people who can cope best are the wealthiest people. For example, despite what the media tries to tell you, cities like New York or Sydney won't be flooded by global warming in the near future. Not because the sea level won't rise but because we have the technology, and have had for a really long time, to hold back the sea and build cities that are below sea level. It's expensive so Bangladesh probably won't be doing it, but we also have the money.
With this economic crisis, the people worst affected are those that had the least to begin with. Yeah it must suck for people who lose $10 million over night, but they're the people who will still have easily enough money to cover their basic needs. People who were already struggling to get by can't afford to lose another $20 a week.
Of course the real people to suffer are those in the poorest countries outside of the Western World, and it gives you a good sense of the "justice" of the world, that we're seeing food crises and probable future famines in third world countries as a result of bad financial management from banks and home buyers in the US.
So yeah, I agree with the sentiment that the West needs to dramatically reduce consumption, but unfortunately we will be the people to cope with the problem the easiest and people who had nothing to do with causing the problem will suffer the most, and I doubt this will have a significant impact on long term consumption rates.
That said, with any crisis, be it an economic crisis like this, a political crisis or an environmental crisis like global warming, the people most vulnerable are the poorest people, and the people who can cope best are the wealthiest people. For example, despite what the media tries to tell you, cities like New York or Sydney won't be flooded by global warming in the near future. Not because the sea level won't rise but because we have the technology, and have had for a really long time, to hold back the sea and build cities that are below sea level. It's expensive so Bangladesh probably won't be doing it, but we also have the money.
With this economic crisis, the people worst affected are those that had the least to begin with. Yeah it must suck for people who lose $10 million over night, but they're the people who will still have easily enough money to cover their basic needs. People who were already struggling to get by can't afford to lose another $20 a week.
Of course the real people to suffer are those in the poorest countries outside of the Western World, and it gives you a good sense of the "justice" of the world, that we're seeing food crises and probable future famines in third world countries as a result of bad financial management from banks and home buyers in the US.
So yeah, I agree with the sentiment that the West needs to dramatically reduce consumption, but unfortunately we will be the people to cope with the problem the easiest and people who had nothing to do with causing the problem will suffer the most, and I doubt this will have a significant impact on long term consumption rates.
While I'm interested in the direction you two have taken the conversation, it's a deep rabit hole that we can go down forever, so I'm going to bring in another tangent now (plus, I think you both did a nice job describing that particular affect so I don't know that we need to continue to define it)
so the new tangent is: I was reading about the number of immigrants (both legal and illegal) leaving the US right now. I guess it's not surprising really, I just wouldn't have thought of that impact right away.
Side note: Yes Jeremy, big stupid greedy US has caused quite a freaking mess. I don't think anyone will really debate it (and I'm NOT challenging anyone to try.. please!), so let's just consider that point conceded, and step far away from that part of the topic if we could.
so the new tangent is: I was reading about the number of immigrants (both legal and illegal) leaving the US right now. I guess it's not surprising really, I just wouldn't have thought of that impact right away.
Side note: Yes Jeremy, big stupid greedy US has caused quite a freaking mess. I don't think anyone will really debate it (and I'm NOT challenging anyone to try.. please!), so let's just consider that point conceded, and step far away from that part of the topic if we could.
Bob R.
Jeremy, Thanks but I think you may need to dumb it down a little more for me.
I get that stock prices are governed by supply and demand, but how does that affect the constantly changing numbers I look at for stocks on google finance? How is there always one price at one given moment for a stock. How do they compile those numbers and who does it?
Thanks,
I get that stock prices are governed by supply and demand, but how does that affect the constantly changing numbers I look at for stocks on google finance? How is there always one price at one given moment for a stock. How do they compile those numbers and who does it?
Thanks,
Donald Cliff