I am just starting to learn about economics, the business cycle, the role of consumer spending, inflation, GDP, etc.

The POINT is that at least I am trying to understand how things work rather than just pointing fingers.

I have discovered that economics can explain a lot about how the world works. WHY? Because the real world data (and believe it or not you can actually find data that does not come from the government. I know, I know, shocking, right?) backs up the general principle.

I see the connection between the principle and the facts. And my personality is such that I can’t ignore facts, even if those facts contradict what my heart tells me to think.

For those who have an open-mind that is willing to be challenged regardless of the initial emotional reaction AND who do not fear monsters under the bed, study economics. You will never look at the world in the same way again.

I certainly don’t and I no longer fear that the sky will fall.

- Funny, you should try stand-up comedy! I will def. come watch you in action.

In that time period, unemployment levels started to climb, and eventually reached 25% three years latter. Its reasonable to claim that we MAY be at the beginning of a recession since the damage done to the financial sector has not happened since 1930. We do not know the implications of the impact of the loss of capital on the future of our ecnomy. I would not rule out the possibility of a depression at this point in the cycle.

It is a GREAT market for Michael to buy his first home in, but you want it to appreciate, right? You might want or need to move for a plethora of reasons after you buy it, and you don’t want to be stuck with the additional house payment if you can’t sell it, right? Everyone seems to think that “bailing out” consumers is a bad thing, probably because they don’t need to be bailed out themselves right now. But stop being selfish! We will all benefit from the government stepping and saving many people from the mistakes they made. Someday, Michael, it could be you. (I know, probably not, but you never know:-)

First, the definition of a recession is two consecutive quarters of negative real growth of GDP.

Second, higher prices and lower income is NOT a recession. That’s called inflation. Yes, there is a difference.

Third, “the war” is not the cause of the current economic struggle. In purely technical terms, GDP = Private Consumption + Government Expenditure + Capital Investment + (Exports – Imports). So guess what? If the government spends tons of money on a war, that actually is a BOON to GDP. We’ve seen it time and time again. War means more government spending, which typically breathes life into a stagnant economy.

In recession, interest rates drop to make money easier to borrow, so that consumers will have greater disposable income on hand, spend it, and thus help rebound the economy. The problem is that too many people borrowed more than they could really afford when times were good. They took out insanely large home loans, car loans and “keep-up-with-the-Jones” Loans without considering that during the good times, they need to be preparing for the bad. Because of the rampant irresponsible borrowing consumers did, they have no credit left with which to borrow, so the low interest rate doesn’t do anything except decrease the value of the dollar.

Let’s place the blame squarely where it belongs, irresponsible consumer borrowing. No one held a gun to anyone’s head, forcing them into that $750,000 three bedroom house, and no one forced them into a 3/1 adjustable-rate mortgage with no limit on the amount the rate can jump. Consumers did it to themselves (and now they want the government to bail them out!!).

We need to quit blaming the government for what they really have very little control over (our spending!) and start taking some responsbility. We made our bed, now we have to sleep in it.

On the up-side, with the currently low interest rates, and the high availability of foreclosures, it makes for a nice market for me to buy my first home…

The state of the economy is currently propped up by a lot of false numbers. American’s are carrying around enormous amounts of credit card debt. This is essentially fake money that most of these people do not have. If someone had not loaned them money, we would have seen some of these “recession” signals a while ago. If housing hadn’t gone through the roof giving people new piles of credit to dig into, we would have seen these “recession” signal a while ago. Gasoline has shot up since February of this year at a faster pace than it had been increasing for the past few years. This is not because demand for the product itself as a fuel that people will consume today has increased dramatically — but because of the speculator demand has shot up since then and the interest rates in the U.S. have dropped.

I think we as a country have been on the wrong path for a while. I think we as citizens haven’t considered where the path we were being lead down with distorted policies, low voter turnouts, lack of community involvement and advertising coming out of our ears would take us. Even if there is a recession, I hope we all take this opportunity to reflect on the situation and think about how we can make out lives better, what we really need and how our government is holding us back and how they can help us achieve those things in the future. Without us and our labor, this country would be nothing. The government has forgotten this. Let’s remember this ourselves and remind them.

Crushing back the price of gas and food would kick start the economy again and get things back to normal. It would be that simple.

Fact is, that the credit crisis tears everything down. As long as this problem isn’t solved there won’t be a recovery!

I am sorry to remark that the US has one of the most unefficient banking systems as far as housing is concerned. The prime rate is 2% (down 3.25%) and mortgage rates have risen and are still about 6% – this means a difference of 4%!
In Switzerland this difference is about 0.75%, in Norway about 0.5%, in Germany about 1%. Thus we have mortgage rates in Switzerland between 3.25 and 3.5%.

Where does this money go?

Conclusion: only attractiv mortgage rates can stabilize the market!

We’re in a recession because:

a. Bush did/didn’t (fill in the blank with your liberal agenda here).

b. Small-brained people have been watching too much CNN.

c. All them illegals is stealin’ our $7/hr jobs.

d. I lost my job, which was over-paying me to take advantage of all them small-brained people.

e. Capital has been grossly mis-allocated since 9/11.