As Economy Heats Up, Home Sales Hit 3 Year High

[DiamondDave]

Sure. The bar has been set low if that's what we're going to call growth. Anyway, the debt will sink us if we continue on increasing it at 1, 1.5 t a year. It's just a matter of time.

Borrowing is the fuel for a healthy economy.

This is about as ignorant of a blanket statement as there can be

If you are a business borrowing short term for supplies for an upcoming huge order of your goods... yes, borrowing is healthy... If you are a country that is now in debt more than its own GDP, and you borrow $0.40 of every dollar you continue to spend, it is FAR from healthy

But... trolling troll is still trolly

 

[LordBrownTrout]

Sure. The bar has been set low if that's what we're going to call growth. Anyway, the debt will sink us if we continue on increasing it at 1, 1.5 t a year. It's just a matter of time.

Borrowing is the fuel for a healthy economy.

There's nothing wrong with borrowing but eventually it must be paid back.

 

[editec]

Based entirely on economic history I have no confidence that economists have a crystal ball.

How many economists warned the nation about the meltdown of 2007?

If economics was a PHYSICAL science, instead of SOCIAL science, EVERY COMPETENT ECONOMIST on earth would have been warning us that the economy was near meltdown.

They weren't because economics is a study of a subject (the financial interactions of the people) that also happens to be studying itself and responding to the change in situ.

 

[drivebymedia]

"How many economists warned the nation about the meltdown of 2007?"

Where were you in 2004 when the non-partisan economists were warning of the coming financial crises brought on by the $400 trillion in worthless mortgage derivatives banks and brokerages were peddling around the world?

Unfortunately, many economists put their personal politics above objectivity - unknowlingly of course

 

[drivebymedia]

Sure. The bar has been set low if that's what we're going to call growth. Anyway, the debt will sink us if we continue on increasing it at 1, 1.5 t a year. It's just a matter of time.

Borrowing is the fuel for a healthy economy.

There's nothing wrong with borrowing but eventually it must be paid back.

Yes, and that's what keeps the economy growing - borrowing, spending, earning and pay back.

 

[TakeAStepBack]

"How many economists warned the nation about the meltdown of 2007?"

Where were you in 2004 when the non-partisan economists were warning of the coming financial crises brought on by the $400 trillion in worthless mortgage derivatives banks and brokerages were peddling around the world?

Unfortunately, many economists put their personal politics above objectivity - unknowlingly of course

Except that never happened. It wasn't until 2006 when MS economists began sounding the alarm and by then it was far too late. Only one group of scholars can be credited with calling the real estate collapse before it happened.

 

[TakeAStepBack]

Borrowing is the fuel for a healthy economy.

There's nothing wrong with borrowing but eventually it must be paid back.

Yes, and that's what keeps the economy growing - borrowing, spending, earning and pay back.

Never heard of savings I guess. Jeebus the short bus must have dropped you off.

 

[DiamondDave]

Borrowing is the fuel for a healthy economy.

There's nothing wrong with borrowing but eventually it must be paid back.

Yes, and that's what keeps the economy growing - borrowing, spending, earning and pay back.

Where is the payback?? Debt is growing... EXPONENTIALLY

 

[PredFan]

There is no debt crisis....NOW.

But the few who actually look to the future, and who care about the long-term welfare of this country and what could happen to our children and their children recognise that there is a crisis.

 

[g5000]

The highest debt-to-GDP ratio the US has ever had was in 1945 when it hit 122%.

We're still here.

Six ways to lower the ratio:

1. GDP growth. If you grow the economy faster than you grow deficits, the debt to GDP ratio lowers. The US economy accelerated after WWII.

2. External devaluation, a.k.a. inflation. Printing money. Debasing the currency. The US rate of inflation for 1946 was 8.3 percent. 1947, 14.4 percent. 1948, 8.1 percent. In 1949 there was a recession and deflation of -1.2 percent. 1950, 1.3 percent. 1951, 7.9 percent.

3. Internal devaluation. Budget cuts and higher taxes, a.k.a. "austerity". Top tax rates by the end of WWII were already in the 90s. After WWII, defense spending was radically cut.

Defense spending in 2005 dollars:

4. Renegotiate for lower interest rate with creditors. You figure the odds of China giving us a break on our debt interest.

5. Default. Give the finger to China, Japan, Brazil, Russia, Britain, and India. Tell them to pack sand. Give them a "haircut" or don't pay them back at all. Then see if anyone lends us another dime.

6. Bailout. The IMF riding in and rescuing us. Figure those odds, too.

 

[TakeAStepBack]

Other countries aren't lending to us now. We're monetizing debt and the federal reserve is buying up 90% of it. International currency holdings would be dumped in the face of default. it's not an option. it would kill the dollar dead.

Treasury Scarcity to Grow as Fed Buys 90% of New Bonds - Bloomberg

 

[g5000]

Other countries aren't lending to us now. We're monetizing debt and the federal reserve is buying up 90% of it. International currency holdings would be dumped in the face of default. it's not an option. it would kill the dollar dead.

Treasury Scarcity to Grow as Fed Buys 90% of New Bonds - Bloomberg

You have it backwards. The Fed is buying 90 percent of our Treasuries so that interest rates are forced down.

It isn't that other countries aren't lending to us. It is the Fed is bidding top dollar for them.

 

[TakeAStepBack]

OK.

 

[LordBrownTrout]

IOW, the feds are deeply engulfed in another artificial bubble that will soon blow and have severe repercussions on all of us.

 

[Rozman]

Carrying such huge can't be good for a country or it's economy.
That was until Obama came along now not only is it not a problem
Dems want to spend more money and get us more into debt.

 

[g5000]

IOW, the feds are deeply engulfed in another artificial bubble that will soon blow and have severe repercussions on all of us.

Indeed.

When the economy heats up, they will not be able to suck back up all the liquidity they have put out there since the crash. There will be inflation, and I believe that will be deliberate. Inflation makes it easier to pay off old debt.

 

[LordBrownTrout]

IOW, the feds are deeply engulfed in another artificial bubble that will soon blow and have severe repercussions on all of us.

Indeed.

When the economy heats up, they will not be able to suck back up all the liquidity they have put out there since the crash. There will be inflation, and I believe that will be deliberate. Inflation makes it easier to pay off old debt.

Yep. Normally, they could jack the interest up to suck it back when times were good but there's too much out there now.

 

[Rozman]

I heard an interview a while back and I'm sorry I can't prove it with a link so it never happened.
Anyway the gist of the story was that government would rater have a problem with inflation rather
then an economy that was constricting.The reason was they know how to deal with inflation and have the means to deal with it.So if government has a choice they would much rather do something then not to get an economy going and if that results in inflation that's perfectly fine with them.

 

[The Rabbi]

I heard an interview a while back and I'm sorry I can't prove it with a link so it never happened.
Anyway the gist of the story was that government would rater have a problem with inflation rather
then an economy that was constricting.The reason was they know how to deal with inflation and have the means to deal with it.So if government has a choice they would much rather do something then not to get an economy going and if that results in inflation that's perfectly fine with them.

[ame=http://www.youtube.com/watch?v=NgSqZKx0mNI]Milton Friedman - The Nature Of Inflation - YouTube[/ame]

In the beginning inflation feels good. Everyone is making more money and employment is climbing. That's where we are now. But as time goes on things get out of hand. We are still paying the social consequences for the inflation of the 1970s.
As far as economic indicators: the UE rate is very high given where we are supposed to be in the recovery cycle. The workforce participatin rate is the lowest in 30 years. Industrial production is declining. GDP is growing very slowly, if at all. The economy sucks and one blow like Cypress will push it over.

 

[BreezeWood]

FINVIZ.com - Stock Screener : 10-Year Treasury 1.92%

US Treasuries yield is 1.92% - that is why the debt is not an immediate problem, considering as well increasing the money supply to pay for it - that also adds the necessary liquidity for a Goods and Services economy, and helps maintain the low interest rates.

Inflation does not necessarily have to evolve but does historically lower the value of debt. Inflation is not so easily controlled as the present conditions.

big winner since 09 is the stock market that likewise in the long run is a hedge against Inflation.