Economics for dummies

Platinum Member Joined: Mar 20 2005 Posts: 5262

Can someone please breakdown (dumb down) the current economic state we are in after the major financial crisis a few yrs ago. What are the experts saying on the next few yrs?

Platinum Member Joined: Mar 20 2005 Posts: 5262

no smarties on here:)

Posted: Fri, May 25 2012, 1:09 pm Post subject: re: Economics for dummies

I keep hearing different things every day from different experts.

Some say it is starting to rebound. Some say it may take another year or two.

Some say they have no freakin clue. Those are the honest ones. We are in such a new situation that there really is no way to know.

Platinum Member Joined: Mar 20 2005 Posts: 5262

That is why I am asking it is so confusing who do I listen to?

Posted: Mon, May 28 2012, 8:48 pm Post subject: re: Economics for dummies

I presume you're referring to the US economy?

Basically US is pulling out of economic downturn gradually. Hence stock market rally since last autumn till earlier this spring. At least at the national level, there's an indication that the unemployment rate is stabilising, there's some degree of manufacturing jobs returning back to the US (partially because chinese wages are now not as cheap as before because of inflation). Corporate earnings are surprisingly robust--could be beneficiary of resurgence of domestic demand, less inflation (oil price coming down, nat gas price really cheap). There's still a mixed message as to housing--modestly positive on new housing starts, though overall property market seems still soft.

However, there're a few "risk factors" facing the economy--notably that of fiscal deficits and Euro crisis. US government remains heavily indebted at both federal and state/local levels. Many economists have different views on what's best--some argue for more budget cuts, while the others argue more government spends to stimulate the economy is a better long-term solutions. (This argument has been going on for at least 60-80 years...) Euro crisis has less to do with tangible economy but can de-stabilise people's confidence in the financial market (similar to Lehman Brothers). Other worries are if China can really continue to grow as its government suggests.

On monetary front, you don't want to have inflation (noone likes high gas prices, especially in an election year) but stimulating economy means printing more money (called quantitiave easing, or QE) at least to make sure there are no credit crunches (eg banks lending to small businesses). Inflation is less of a problem now, but that also means low interest rate (see how much you get for savings accounts and CDs).

Active Poster Joined: Feb 10 2011 Posts: 54

Check out this book, or anything else written by Peter Schiff.

http://www.amazon.com/The-Real.....amp;sr=8-1

He is the only pundit who accurately predicted what occurred in 2008. According to him, the "real crash" has not happened yet. The U.S. economy is on the brink of a true collapse. He recommends buying gold, silver, and foreign stocks, and avoiding investing in the U.S. government at all costs.

Diamond Member Joined: Dec 28 2005 Posts: 4653

Platinum Member Joined: Aug 12 2007 Posts: 20487

Willow don't you live in Israel? Where the economy defies the laws of nature? :-)
_________________
The future simply isn't what it used to be....

Active Poster Joined: Feb 10 2011 Posts: 54

Tova - good for you!

I also know a few people who realized that there was a housing bubble, but AFAIK, Peter Schiff was the only talking head to do so. Maybe I am wrong. Anyway, his books (published both before and after 2007) are the most famous "dumbed down/popular books" to take a negative view of the US economy.

This is a famous video:

http://www.youtube.com/watch?v=Z0YTY5TWtmU

Diamond Member Joined: Dec 28 2005 Posts: 4653

Didn't mean to sound like an expert economist or anything like that. I just remember that we bought our house in 2005 and the types of loans offered to us, and the very large amount of money we could have borrowed (thankfully we have a head on our shoulders and only borrowed the amount we felt we could comfortably afford) I just knew that people were getting themselves in big big trouble (interest only loans, etc.).

Platinum Member Joined: Mar 20 2005 Posts: 5262

Yeah I live in Israel. My dh is so wordly I just want to understand and have some input when he talks.: Smile

)
Even though he sometimes asks "did you read that on imamother?