am I the only one with 'gloom & doom' thoughts?

gibby2015November 9, 2008

Man, I am really concerned about what lies ahead with the economy. I have been thinking for a while - probably since early this year - that we are heading for some kind of major depression like "correction". Not sure why since I'm no economics wizard - just didn't seem like the spending and economic growth could not continue - along with the excessive credit card debt and foolish mortgage situations I read about people getting into.

Now I have multiple friends who have been laid off in all kinds of industries and I am really concerned that they are in for very tough times ahead. Maybe I'm reading too much but everything I'm reading about business, manufacturing, global economy, etc. makes me think we are in for an extended period of tough times ahead.

Then I watched the movie Kitt Kitredge on a plane and that whole depression era lifetyle is stuck in my mind. I think people have taken for granted that somehow we were "protected" from having this happen again and now a new set of circumstances have allowed another severe recession/depression to occur.

DH and I both have good jobs for now and I feel very fortunate for that but I am in serious hunker down mode. And I'm really concerned for friends who have lost their jobs. DH has experienced layoffs in better times than these and it has sometimes taken a long time to find another comparable position.

The government can try to "fix" this but how do you pay for it? Tax revenues are way down - even government jobs are at risk. And raising taxes just doesn't stimulate economic growth. It's a tough situation that I think is going to take a long time to recover from. It just seems like we've advanced to a certain level of prosperity and we're not going to get out of this without a setback to a previous, lower level of prosperity.

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..."how do you pay for it?"

We'll all pay for it in the form of cuts or eliminations in services or goods or in a ramping down in lifestyles. Those of us paying property taxes will pay more; there'll be little add ons on electric and water bills. I think we're only seeing the beginnings of what we are going to all have to pay for in one form or another. In a sense, it's always been pocketbook issues - great when times were good (and if you think about it, all these excesses exploded in the "good times") and lots of gnashing of teeth when times go sour.

Americans unfortunately got used to cheap and plentiful and perceived entitlements - cheap energy, affordable food prices, big cars and the gas to fill tanks, easy credit... Belt tightening is tough when one isn't used to it.

I agree that it's frightening to see our way of life become diminished by our own fault or the faults of others. Today there was a blurb in the paper that the big bailout is likely going to help pay the legal fees of greedy corporate executives. How painful is that idea!

I retired at my first opportunity to do so, and have been retired for a few years now. I'm mortgage free, have zero debt, have invested wisely with a well balanced portfolio - though am certainly not untouched by Wall Street, live comfortably on my pension, interest and dividends; have savings; have Social Security and a 403(b) to draw on at some future date.

I'm at a stage in my life where I no longer need to buy things, don't even need to go out if I don't want to and am lucky in not having to sacrifice food or prescriptions or gas to take care of any emergency or maintenance an older house might require.

Some of the things this recessionary period - which could last for years - might require of me are going to be what they're going to be and I'm reconciled to having to do my part. It seems as though it's been a long generation ago since everyone, across the board, has been asked to sacrifice. We no longer seem to have the national will to all pull together like our parents did during the Great Depression and later WWII.

Historically, we pull out of these things and who knows, we all may come out better for it.

    Bookmark   November 9, 2008 at 3:04PM
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Yup, I do believe we have a couple generations now with a whole different attitude than what prevailed in the 30's. I think it's going to be a difficult adjustment for those who have experienced only vast prosperity. I too feel like I'm in good shape to weather the storm. I'm not retired but am in my 50's - have done alot of things and don't want for anything any more - and have a lot of money saved and invested. I could hunker down and live a simple, frugal life for a long while. In fact I'm already shifting into that mode though I don't have an immediate need to do so. I wonder if I'm overly paranoid and pessimistic.

    Bookmark   November 9, 2008 at 4:50PM
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gibby -

We are going to be in a recession by '09, that's a given. But the effect on people will depend on how well they have monitored their finances. For those 30 & 40 Something people, life may be very difficult for a long while. They have expected the easy credit and multitude of "toys". Many felt they were entitled to best without really planning or working for it. They must change their entire financial thinking process.

Government can't fix this because the "experts" don't really know what is happening or is going to happen. Raise taxes and the economy will grind to a halt. Keep giving handouts and the national debt will be out of sight for our great grandchildren. These are same ones who screamed just months ago that we needed to pay down the national debt! Go figure.

And don't forget, this was a big political year with all sorts of agendas being passed around. That has had a major effect on what the news prints and televises. Remember, bad news sells.

I'm retired and we only have the mortgage payment. No credit card debt, no car loans. My wife continues to work because she wants to, not because she has to. We have our investments and they have taken a hit. But we don't need them right now so there is time for them to recover and grow. And we don't have the "I wants". There are things we will need but there is a big difference between want and need. My wife asked me what I wanted for Christmas and I said nothing, really. Except our health and the health of our family.

The economy will recover but it will take time. We saw this on the '80's with the S & L collapse. We came back then, we will come back this time. But in the process, people will have to learn to live with less and save much more. That is a very good concept. Maybe government - local, sate and national - will learn to cut back. Tax returns are dropping - read government income. When your income drops, you cut back. There is no other option. I'm not sure our politicians know that lesson yet. But maybe they finally will.

I will continue to see the glass as half full - not half empty. There are aspects in our local economies that are doing well. But that won't make the news - too bad. In our area, local banks are writing mortgages and car loans and HELCOS. You just have to qualify - novel concept - like have a job (verified by your employer), show your taxes returns for three years, show your credit history. Houses are being sold. Local credit unions are healthy and lending, again to qualified buyers. Our jobless rate is now 2% below the new national figures. So all is not doom and gloom.

If we learn the lessons from this mess, our economy will be stronger than before. I believe we will learn.

Enjoy the journey.
eal51 in western CT

    Bookmark   November 9, 2008 at 5:40PM
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Are times getting harder? Almost certainly.

Will things swing back up again? Yes. They always do, eventually.

Hard times reward people with low debt and high savings. It's not a bad lesson to be teaching folks every ten years or so; memories, alas, tend to be short.

Overall global prosperity is now shared by the widest number of nations ever, in historical terms. The media is sensationalist and focuses on short term issues. Good news, as eal51 points out, seldom makes headlines.

If you "x" out financials from the Dow, all the other companies have in fact reported profits for 2008. Maybe not as much as expected or as much as last year, but they have indeed remained profitable. And the corporate balance sheet is flush with cash, unlike previous recessions.

As Suze Orman likes to say, "People first, then money, then things." The vast majority of Americans are, compared to the global economy, very comfortably well-off.

The sky is not falling, doomsayers to the contrary. People who are panic-selling their portfolio now are going to miss the inevitable upturn, just as they always do - most individuals buy high and sell low, the exact opposite of what should be done.

A little sacrifice on all our parts can mean an improved life for future generations. I can and do believe we are capable of doing this, with the right leadership.

    Bookmark   November 9, 2008 at 7:55PM
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I wonder what percentage of people who received their stimulus payments actually spent them on goods or services that they might not have otherwise. I doubt that the govt wanted us to use it to pay utility bills or normal grocery purchases. That isn't going to stimulate the economy. Now there is talk of another round of stimulus checks. Is that just encouraging people to buy things that are wants and not needs?

    Bookmark   November 9, 2008 at 8:44PM
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Okay - maybe I'm over reacting. I agree - lessons learned will be good for individuals as well as the economy. I guess I'm fortunate that I somehow learned the lessons necessary to end up being a fiscally responsible person with a strong work ethic and sense of personal accountability. So I'm well prepared for whatever downturn lies ahead.

    Bookmark   November 9, 2008 at 8:56PM
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Like gibby3000, I feel I am well prepared for downturn. I am also skeptical about the level of recovery.

When people talk about recovery, are we looking at the rates of GDP we've had for last several years? Are we talking about easy credit without income verifications and skyrocketing home prices so that people can spend unrealized income? Maybe I soaked myself too much in James D. Scurlock's book, "Maxed Out."

BTW, earlier last month I went to a car dealer to purchase a car. I was going to pay cash, but I applied for a loan just to see if lending was really frozen. To my surprise, I was qualified for a loan with little income (I am basically a homemaker) just because I had a good credit score. The salesman also suggested I could max my credit cards for downpayment. No wonder lots of people are maxed out!

    Bookmark   November 10, 2008 at 2:04AM
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We are about to enter the frightening world of unemployment. DH is getting an early retirement (at age 51) from a company for which he has worked for 10 years. They have announced that they are downsizing the white-collar work force by one fourth. If enough people take these offers, others will remain on the job. If not enough take the offers, then others will be laid off without the fare-well packages by the end of the year.

DH's last day of work is Nov 30. He has been applying for jobs for the past week. He has an unusual skill set with both mainframe and web-based IT languages, project management experience, and even offshore project management.

The retirement income will make our house payment. My income is significant, but it is as a contractor. I get no sick pay, no vacation pay, no holiday pay, and no unemployment insurance if I lose my job. We are scared silly, but believe that bailing out of DH's old job early gives him the best chance for a new job. We should be fine, if all goes well. His health insurance will continue. If/When his old company goes under, the Pension Guarantee Trust will replace all but about $50/mo of his pension. He thinks that the health insurance will be covered, too. One other reason that this is a good time for DH to leave is that I have a colleague who is leaving. Her work will be divided between the three of us, and I will likely get more time. Her position will not be filled right away, but I am a good contender for her position if they do decide to fill it. So in a few months I may go into a real "hired" position with benefits.

We are rather stuck here in Michigan. DH's dad lives with us most of the time (he is at a nursing home for rehab right now) and DH's sis and brother assist with his care. We need all three of the siblings to manage this. Another reason we are stuck here is that we have two houses. When DH's dad moved in with us a few years ago, we moved to a bit bigger house with fewer steps. It was just the start of the housing downturn and we never did sell the old house. It is in a rent-to-own situation right now. Our renter is supposed to buy in about a year, and $200/mo of her payments are toward her down payment. I have that amount already set aside in a saving account, so we are ready in the unlikely event that she is able to get a loan next year. We also paid off most of our debts - we still have a couple thousand in a HELOC from our emergency furnace replacement last winter. Our cars are paid for.

We have a full freezer and a determination to lower our costs. DH is ready to take anything he is offered, and we are united in our determination to get through this okay. Wish us luck!

BTW, I grew up reading the "end of the world" genre of science fiction. I kind of grew up expecting apocalypse of one kind or another. I've been reading the "Buying and Selling Homes" forum for several years and was not at all surprised when everything started to tank this fall (thanks to all the smart folks there). We did not do much to prepare for financial disaster (except pay off our debt), since DH believes "you can't time the market." He seems to think that timing the market includes making any changes to your set plan!

    Bookmark   November 10, 2008 at 2:59AM
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rocio -

I don't know what car dealer you are talking to, but that is not the case around here. Our oldest works for one of the bigger dealerships in our area. He has said credit is very tight. He is having a difficult time moving vehicles. And he is their top salesman!

Banks are not taking credit debt on cars. You can't rollover you loan balance into another loan anymore. Loans are available but many lending institutions are being very picky as to who they lend to. You must have a downpayment - not on credit cards - and show employment history.

Enjoy the journey.
eal51 in western CT

    Bookmark   November 10, 2008 at 8:32AM
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You'd have to be living in a cave NOT to be concerned. Recessions are no fun -- long ones even less so.

Most of us here are congratulating ourselves on having been good ants, having saved and not over-extended. That won't protect us from potentially suffering more than a little if the economy continues to fail. The ant can't stop a flood that washes away his home and his hoard. It's hard to see the economic 'storm' grow and know you have no control over what will happen.

So...if you were the incoming President, what would you do and when?

    Bookmark   November 10, 2008 at 10:12AM
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Chemocurl zn5b/6a Indiana

So...if you were the incoming President, what would you do and when?

That 'might' be something best left to be discussed at The Hot Topics Forum

I too am not experiencing gloom and doom thoughts and have prepared myself for being 'secure'.

I do think though that there will be a lot of folks who will be forced to learn some lessons the hard way. The 'I want it now' folks who do not own what they have in their possession and who made a lot of unnecessary purchases they really could not afford.


    Bookmark   November 10, 2008 at 12:54PM
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Sue, Remember when President Reagan used to say, "There you go again?" Your post is about how well YOU (and we, all of us posting) have done in making yourself (ourselves) secure. You castigate some 'others' for their wicked ways and infer that we won't suffer because we have been thrifty.

I'm saying that it may not matter! Our ant hills may well be damaged or swept away despite our care and 'goodness'. Recessions can swallow a lot of careful people.

Thanks for the Hot Topics suggestion!

    Bookmark   November 10, 2008 at 5:28PM
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There is so much doom and gloom, it reminds me on the mania of the housing bubble,when the only thing you heard was how you couldn't lose in housing,prices and values can only go up!!!! Sure times are tough for some,but this is just part of the economical cycle.Unfortuneately,many people forget the "cycles" of the economy, and are unprepared for downswings..
I can assure everyone,the sun will shine and the economy will flourish,again at some point ;)

    Bookmark   November 10, 2008 at 6:16PM
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We're moving into a new world, folks.

What kind of ridicule would one have faced had s/he suggested, as recently as 6 mos. ago, that General Motors is within a little over a year of possibly going bankrupt??!!

As stuff gets scarce, it gets expensive - witness gasoline and other petroleum products.

And we hear people in this area saying that we want to set up a system to become less dependent on foreign-source oil.

So we dig and drill, then use up our oil, including that found far offshore, quickly ...

... while it's still "cheap" ...

... then, in a few years, when it gets *really* expensive ...

... we'll have used almost all of ours up ... and our grandkids will be forced to buy it from whatever source is still available - at *really* high prices!

That's a really smart strategy, wouldn't you say?

Another suggestion that could be a good guide for us.

As you recall, when we've been talking of the high price of gasoline here in recent times, the Europeans were saying that it's been $5.00- 6.00 a gallon for them for a number of years.

So - who have done the research to make use of wind- and solar-based power? The Europeans, seeking alternative means of producing energy. They've developed the leading-edge technology, so I understand.

While we were contentedly moving along using our cheap gasoline and natural gas. Not being under pressure to find alternative means, we couldn't be bothered.

We've enjoyed some of the world's cheapest food, but with the world becoming much more one market, and more people being around to be fed, food will become more scarce, and more expensive, which will hurt many of us much less than many in poor countries, for a much higher proportion of their income has gone for food, and they just can't afford a greatly increased price.

Dad was one of the better-off farmers in our locality - we had a larger farm.

We pumped drinking water by hand from a well in our yard when I was a kid and it sat in a pail on a shelf in the pantry ... there was a hand-pump at the sink for water from the cistern for washing. Dad put in a deep well in 1936 and we had a cold-water tap at the sink in the pantry.

Had a bucket under a seat, vented into a chimney, in a small room upstairs as toilet in winter, a hole in a small closet by the woodshed, three doors away from the kitchen, for use in summer.

Warm water for drinking and cooking in a large teakettle on the woodstove, slid over the fire or back at a distance, depending on need. Took a bath on Saturday night in a galvanized tub behind the wood-fired cookstove in the kitchen, using water from a reservoir at the far end of the cookstove.

Quite likely we'd have had a bathroom with running (at least cold) water shortly after the drilled well provided water under pressure, had Mom been around.

I didn't have hot water on tap at a sink, or a flush toilet, until I went to University in 1947, aged 18.5.

When we moved to Saskatchewan, sharecropping for a time after 1946, we had no electrricity for about 5 years and had to haul all of the water that we used for cooking and drinking from somewhere else, usually a standpipe at the edge of the city.

Many people in the world still live in much more primitive conditions ... and we are in competition with them, these days. Many of them are going to come here, whether we like it or not - witness Europe, today.

We need to spend money on research, as many of the world's patents were issued to people/corporations in the industrialized world, in earlier years ... but now increasingly many are being issued to agencies in many other countries.

We need to keep our school system in good order, for the kids in many countries are hungrier and more committed to high achievement than many of our kids - and they lack the sense of entitlement that many of our kids have.

We need to set an example for our kids, as their main source of learning is their parents, of seeking excellence. One place that we can start is care in spelling ... I am surprised at how many people here spell "losing" as "loosing" ... and "definately" instead of "definitely".

End of rant ... I guess.

I hope that you all have a fine - and a bit challenging - week. We need a challenge now and then, to keep us sharp.

ole joyful

    Bookmark   November 11, 2008 at 5:31AM
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I'm not worried about all the doom and gloom. I think we will cut back on a lot of things, but that could be a good thing. We have a lot of excesses in our lifestyles, so we can cut back without much change is standard of living. I have faith in our younger generations. I think they will adapt to the changes much easier than being portrayed. I know there will be a lot of pain for individuals during the changes to our economy. But, I think the changes will be easier and faster than is being predicted. I think the recession will be much easier than the late 70s malaise, when we lost all the manufacturing jobs and replaced them with service jobs. Now we have lost primarily services jobs and they will be replaced with new services jobs. The economy is much faster to respond to changes now.

    Bookmark   November 11, 2008 at 10:41AM
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The housing market will rebound within two years. It always does. Our President elect will make this a priority.

    Bookmark   November 11, 2008 at 11:16AM
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Wow, don't remind me of the recession in the early '70's. It was heartbreaking to interview people with graduate degrees for a clerk-typist job paying $500/mo. I had people in tears in my office when I had to turn them down - yowch!

I agree, our economy is more flexible than before. All the more reason to keep encouraging young people to be educated, aware, and be able to handle their financial affairs in good times and bad ones.

    Bookmark   November 12, 2008 at 6:45PM
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My parents are foreign born - my mother British. I grew up hearing stories of WWII and post WWII England. Homes were heated with fireplaces, not forced air and chilbains - nasty joint swellings were common as a result. How, meat was rationed - they ate it once a week perhaps two if they could stretch it. It was stored in the larder because refrigerators would not become affortable until the 60's. And that was purchased by taking a bus which only ran twice a week into the neighboring village to the butcher. And how, her family, one of the lucky had one car for her father to go to work in. Everyone else took PT or used a bicycle or just plain used their shoe leather. And mind you, these were middle class people.

And in the more recent past, my in-laws related stories of how in the 50's and 60's in Iowa - each family had 6 six kids used layers of cardboard to make old shoes last until the next pair would be bought the following Christmas.

My DH thinks I want to live like we're in desparate times and it's hard to convince him and others that we are. It's like talking to ostriches with their heads in the sand.

He grew up dirt poor and every so often he likes to splurge to forget about some of the depravities of his childhood although most of the time he's pretty frugal - he & I shop at Aldi's & Salvation Army for food and clothes and we own our cars outright. But he thinks I'm being mean for telling him to walk to the drugstore instead of driving the 6 blocks, that he should eat less to make the food stretch or that would should eat out once or twice a month instead of once a week and putting the extra cash in a bank account and that the heat should be turned down to 62 instead of the usual 65/68.

    Bookmark   November 14, 2008 at 2:02PM
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gonativegal -- It's hard to understand from your post if you are reasonably or unreasonably fearful. Do you believe you will be without adequate funds for food and clothing in the future? How much would you need to have saved for a tomorrow to be comfortable spending a little more freely today? It's self-defeating to 'live poor' in fear of 'being poor'. (Of course I may be misunderstanding your post.)

I hope your 'ant' and what you perceive to be your DH's 'grasshopper' can reach a happy medium!

    Bookmark   November 14, 2008 at 2:32PM
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gonativegal - I hear you. My parents grew up under Stalin, the years when he was starving the Ukraine into submission, taking everyones land and sending everyone to the camps.
Growing up here I used to be embarrassed and resentful of their frugal careful and somewhat paranoid ways.
No one gets it. Its all about jobs (not the real estate market which is just a symptom). We are not growing jobs. So I think an old fashioned protracted depression is coming. Now I wished I'd listened.

    Bookmark   November 14, 2008 at 4:46PM
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How can our $20.00/hour jobs persist...

... when we're in competition with folks who figure that they're lucky to be making 5 bucks a day?

And, for many, that's a six-workday-a-week regime.

Try forming a union ...

... where's there's 20% ongoing unemployment.

We've been mollycoddled.

As for innovation - let's not forget that an increasing proportion of the patents these days are being issued to people and businesses in distant areas of the world.

On which, if our companies want to use those ideas in future, they'll be sending royalties abroad ... in addition to paying their employees our traditional higher rates of pay.

Maybe they'll set up a business in this area then ... maybe not.

Good wishes for being able to live within your means ...

... and being in a similar boat in 10 and 20 years' time.

ole joyful

    Bookmark   November 15, 2008 at 2:07AM
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mary -- It's not paranoia if there's real danger. It IS paranoia when the danger is only in the mind, a memory of past danger that warps present reality with suspicion.

I'm sure it is very hard to 'unlearn' suspicion born of past experiences, but if we can't we might as well still be living in that terrible past. It poisons the present and future.

The 'gloom and doom' of the OP here reflects an attitude or belief. We may be better served to look at economic facts and trends.

    Bookmark   November 15, 2008 at 10:11AM
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No, I don't feel doom and gloom, at least not yet. I have no debt at all. I own my house and it is not an expensive house to maintain. I have a good job with good benefits. Although there is no talk of layoffs, it tickles the back of my mind. Nevertheless, I could get by just fine.

What I do feel is sadness and disappointment. I am at an age when I was planning to retire in three years and do a lot of things I have never had the chance to do. That is seeming less and less of a possibility. I am considering postponing some renovations to my house. Nothing extravagant but something I have wanted for a long time.

So, yes, there is a cloud over a lot of people's heads. Right now it feels like everyone is paralyzed waiting to see which way the cat will jump.

    Bookmark   November 15, 2008 at 10:42AM
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Handling money is essentially an emotional issue. Money is never as important as what it MEANS to you, and individually that will be something different from the next person. It should be no surprise that the #1 cause of conflict in a relationship is

One of the things that struck me most about working for an independent CFP was how much time he spent with his clients. As I've mentioned before, he has a number of second- and third-generation clients, and of course a fair proportion of widowed seniors. He is fond of saying that half his clients he has to restrain from spending too much, and the other half he has to encourage to spend more (to stop being miserly, in other words, to their own detriment).

Having lived through the '70's, I'm surprised that so many people seem to have forgotten what it was like during those times, when clearly so many of the folks here were around then. There was extreme political strife domestically, the unemployment rate was huge, companies were going bankrupt. Credit card rates were usorious; tax rates were high; inflation was in double digits.

The assassinations of Bobby Kennedy and Martin Luther King in '68 were still present in people's minds. The Kent State massacre happened. Mandatory busing was creating violent confrontations in many major cities. Affirmative action for women and minorities were divisive issues. There were many who questioned what was happening to our country, seeing moral decay and social alienation.

Nixon was impeached, and resigned after the Watergate scandal. The Arab oil embargo created lines around gas stations as the US experienced oil shock for the first time. South Vietnam fell to the Communists as the US finally left. Love Canal's toxic waste brought ecology to the country's consciousness at last.

Remember these headlines during that decade? People thought the US would collapse into a third-tier country then, too. 1974 brought us the worst recession in 40 years.

Despite how painful things are today, they are no worse then they were 30 years ago, and a great many things are in fact better. You can see the glass as half-full or half-empty; but only time will tell whether the level goes up or down.

    Bookmark   November 15, 2008 at 1:45PM
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Wow, jkmom you brought back a lot of memories of those times. I remember the long gas lines. I also remember the Cuban missile crisis and air-raid drills in school and fall-out shelters. Somehow being young and dependent on adults made it less scary.

I'm not worried about what is happening now except for the loss of retirement funds. Our economy always finds its way, but for us older folk, the loss of income from investments is dangerous. We don't have the luxury of time...

    Bookmark   November 16, 2008 at 12:58AM
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Ya, for me I was too young in the 70's to be able to compare the economic conditions of that time with today. I wasn't responsible for much since I was still in high school. My family never had much and we had about the same during that time. I had a job and paid for all my own stuff and I was pretty frugal. I do remember pondering whether to buy something that I thought was somewhat frivolous - and telling myself it was good for the economy if I spent more!! Must have been the same situation as now - consumers need to spend more to get the economy going.

After I graduated from college I remember the bad inflation - prices at the grocery store went up every week. Life was simple then though and I didn't think much about it. And then when we bought our first house we assumed an 8% mortgage that we thought was a great deal - though we did have to borrow some add'l cash to make up the difference - that was at 18%!! Over the past few years I have thought about that from time to time and how we have had (up until now) a very long period of vast prosperity overall - without much in the way of setbacks.

I'm not that close to retirement so not concerned about the stock market - probably time for that to recover for me. And I've even thought it might be good for me that the down cycle is now so maybe it will be up when I'm retired. However I am concerned for people I know who are retired as well as several people I know who have lost their jobs. I've never known anyone personally who lost their home - I'd really hate to see that.

    Bookmark   November 17, 2008 at 1:26PM
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The country is not in the same situation we were in the 70's and 80's. We did have some manufacturing and jobs. Much of the depression then was geographical. In other words, you could move to find a job. When the jobs are all in China, India and Mexico, that's not possible.

We weren't up to our ears in debt to a foreign nation then either. A nation to whom we are sending most of our income anyway, buying cheaply made goods.

We also didn't have from 20-50 million people living in this country illegally - taking jobs Americans will need, using social services Americans will need, draining our education system American children badly need fixed. Much of the money these people make is being siphoned out of the economy back to Mexico and other homelands. It isn't been kept here to circulate and create jobs.

No, it's a whole 'nother world than it was in the 80's.

I remember some 5 years ago when I would say the economy is a house (no pun intended), of cards built on overpriced and irresponsible mortgages. Boy, did I get guffaws. I got people telling me how gloomy I was and that we had the best economy ever and that was proven by the fact that more people now own homes than ever before.

In fact, some were laughing only a few short months ago.

This makes the S&L debacle, also caused by an unholy alliance between government and the lending industry, look like just a minor glitch.

It is just and prudent to be fearful. It is prudent to prepare for it. The government can't borrow enough money to bail out everyone who made bad choices, or who has bad times regardless of the fact they were responsible.

There is nothing wrong with knowing that bad things can happen and preparing for them.

    Bookmark   November 19, 2008 at 7:20AM
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Undocumented people that are here are doing the jobs that no one wants to do. Always has been like this; always will be. Google the word "bracero" and you'll find a government-sponsored program that brought workers to the U.S. in the 50s to pick crops. No one wanted to do it back then either!

Anyway, this downward trend is just a self fulfilling prophecy that we keep doing to ourselves. Just like oil prices that kept climbing to $150 barrel. Everyone just watched it go up even though technically it probably shouldn't have gotten higher than $90.

I voted for obama but perhaps we need some of that those old Bush statements to "go out and spend money". We're all being scared from spending our money. Consumers, banks, everyone.

    Bookmark   November 22, 2008 at 11:19AM
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I remember the bracero program and I would not be upset with something like that now. Certainly, there are times when some workers are needed. What we have now is night and day different from the bracero program. They were seasonal, they were contracted for a time and went home. They were the responsibility of the person hiring them.

If you were made King of the country for say, four years, what would you do to fix our problem?

    Bookmark   November 22, 2008 at 4:54PM
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"It is just and prudent to be fearful. It is prudent to prepare for it. The government can't borrow enough money to bail out everyone who made bad choices, or who has bad times regardless of the fact they were responsible. There is nothing wrong with knowing that bad things can happen and preparing for them."

I couldn't agree more.

"If you were made King of the country for say, four years, what would you do to fix our problem?"

I don't want the job, but whoever does should be prepared to do the following:

1) Make the CEO's of failed banks and insurance companies return their bonus's. STOP REWARDING them for planned malfeasance when their actions have so negatively affected such a disproportionate number of the population.

2) Outlaw derivatives that are kept off of banks' balance sheets. Make any bank who accepts bailout money have to uphold minimum (transparent) reporting standards.

3) Enact regulation that prohibits analysts from accepting pay from companies they are rating.

4) Charge corporations hefty taxes when they send send jobs overseas. Give tax breaks to those who develop jobs here in our own 'back yard'.

    Bookmark   November 22, 2008 at 5:39PM
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onward-upward, the braceroes didn't do the jobs no one wanted to do. They did the jobs there weren't enough Americans to do. Many Americans did those jobs - there just weren't enough as it was usually seasonal, and temporary.

My husband's family worked the fields with braceroes,and some illegals, and I had friends whose families went to West TExas every year. They never got to start the school year until sometime in November usually. Not everyone could leave them farms, homes, jobs, to go do seasonal temporary jobs.

Much of that is done by machinery now = as would much more if cheap (subsidized) labor wasn't available.

dreamgarden - I don't know from derivatives, etc., but I'm probably with you on that one.

Actually, I would confiscate the personal fortunes of many/most of the executives of those companies who caused this debacle, as well as the lawmakers who aided and abetted. Leave them only a middle class lifestyle.

I like 3 and 4.

I think it would be symbolic, but a good symbol for company executives to forego their bonuses this year. We'll see.

Make lobbying a felony for both lobbyist and person being courted - especially lobbyist for foreign companies, governments, etc. That would put a stop to the second career of 3/4 of the politicians in Washington.

Alternative energy. We are going to have to do it someday. Why not do it now?

Fix our education system.

Fix our immigration system. Lots of stuff there.

Fix our welfare system. People need to work, if they are able. It is good for the body, mind and spirit.

    Bookmark   November 22, 2008 at 7:12PM
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You didn't google the word bracero, you're just relying on what you think you know. The program was started in the 40's (during WWII) and ran all the way till the mid 60s. The reason for it was because it was cheap labor for the railroad and agriculture industries. Same as now for the homebuilding, restaurant and hospitality industries. If people really wanted to end hiring undocumented people right now, just pass a law that you will throw the person/business owner hiring these folks in jail and that will end the problem. Short of that, nothing will happen.

We have a law that you will go to jail if you carry some cocaine in your pocket, why not go to jail for having an illegal working for you?

    Bookmark   November 24, 2008 at 12:37PM
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We have all the laws on the books already to take care of the problem of illegal immigration.

No law is any good if it isn't being enforced.

A bracero was not an illegal -

    Bookmark   November 24, 2008 at 1:28PM
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According to the law of supply and demand, the illegal problem will self-correct when 1) non-illegals start to want the jobs (and the pay) that illegals currently occupy, and 2) the number of jobs remaining is smaller than the number of illegals. Note that an illegal living in this country who is not working (perhaps temporarily) but still purchasing housing, fuel and food is actually contributing to the welfare of the legal population through taxes.

The unsung heros of the global economy are the intellectual property rights lawyers. We invent stuff for a living. The service side of our economy supports the inventing side. This doesn't have anything to do with illegals in the long run.

    Bookmark   November 24, 2008 at 3:06PM
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ladytexan- "dreamgarden - I don't know from derivatives, etc., but I'm probably with you on that one."

Here is the 'story' on derivatives. You can read more about them at my new post titled: "What Is a Banking Meltdown And Why Is it Possible?"

I've been following Martin Weiss for quite awhile. A lot of what he has written has come to pass. I've taken some flak here for 'fear mongering' but I don't care, it is MY money to lose. If I hadn't listened to what he said last year when the first sub-prime rumblings began, I would have lost thousands of dollars. One doesn't even have to pay for his investment newsletter. Its free. I have gotten far more value out of it, than any financial planner ever gave me (and charged a pretty penny for). Check out his credentials. He's been around the 'financial block' so to speak.

"What are derivatives? Think of them as bets and debts by the super-rich and the world's largest companies.

What's the market for derivatives like? Think of it as a giant international casino:

* In the main hall, they bet on the interest-rate roulette.

* In the side rooms, they bet on foreign-currency blackjack, commodity craps or stock-market poker.

* And in virtually every sector, the bets are financed with generous amounts of borrowed money.

But unlike ordinary markets that you and I are familiar with, this giant casino is not just about betting on a price that goes up or down. It's about betting on virtually every quirk and intricacy of nearly every investment under the sun.

Some of the bets are high risk; some are not.

Some are for hedging against losses; some, for outright speculation.

But everywhere, the dangers are undeniable:

Danger #1
The Sheer Enormity of the Derivatives Market

In its latest survey, the Bank of International Settlements (BIS) calculates that the total "notional" value of all derivatives outstanding in the world is a mind-boggling $415 trillion.

That's over eight times the GDP of the entire world economy … twenty times the total value of all U.S. stocks … and fifty times all the Treasury debts of the United States Government.

The fear: That any unexpected disruption in this $415-trillion market could throw the world's financial markets into turmoil … bankrupt hundreds of hedge funds … wipe out the profits of big-name financial institutions … sabotage the investments of pension funds … and scramble the portfolios of millions of average investors.

Danger #2
The Unbridled Growth

In 1998, the last time the derivatives market nearly blew up, there were "only" $80 trillion in derivatives outstanding worldwide, according to the BIS.

That was already huge.

But as I explained a moment ago, now the total derivatives outstanding has jumped to $415 trillion, or over FIVE times more!

And just from 2005 to 2006, it surged by a whopping 39.5%, about TEN times faster than the growth in the global economy.

Danger #3
Enormous Risks

If the risks were spread among thousands of institutions, each with plenty of capital to back up its bets, this derivatives balloon might not be such a threat.

But the U.S. Government's Office of the Comptroller of the Currency (OCC) reports that, in the United States …

Just FIVE banks control 97.1% of the derivatives in the entire U.S. banking system.

Worse, among these five banks, none " not ONE âÂ" has the capital to cover its net credit risk, the primary measure the OCC uses to evaluate the risks these banks are taking in their derivatives trading.

Links that might be useful:

Financial System in Jeopardy (by Martin Weiss)

Financial Weapons of Mass Destruction
by Martin D. Weiss, Ph.D. 05-24-04

Distortions, Deceptions and Outright Lies
by Martin D. Weiss, Ph.D. 04-07-08

    Bookmark   November 24, 2008 at 5:48PM
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Perhaps our multi-car, McMansion, consumer-spending society will be learning a lesson. We have come to take so much for granted and will perhaps be getting a reminder of what is "needed" and what is merely "wanted."

Of course, there are always those who live below their means. But many tend to spend too much, carry too much debt, and save too little. And no bailout will allow us to continue down that road.

Is that "doom and gloom"? I don't think so--perhaps the credit crunch is more of a lesson.

I'll admit to being pretty disappointed that my early retirement plans evaporated when my 401k fell by six figures. But that's not doom, either.

    Bookmark   November 24, 2008 at 9:13PM
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