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How bad is the economy? My wife and I have been shopping for a vehicle this week, out of necessity. I didn't see another prospective buyer at the dealerships we visited. Not one. It was a hassle trying to test drive vehicles because the batteries were dead, and even the electronic keys didn't work because they hadn't been used for so long.

I think it will be years before many new homes are built in this country. Between the price uncertainty that will linger for years, and the ever-increasing regulatory hurdles, it's no longer rational for a builder to build. My wife and I started building our home before the economy cratered, so stopping the project wasn't an option. But the process has taken over four years to get approval, and even though we do expect to finish on budget (sort of), the market price of the home will be worth maybe half what it cost to build, assuming home values keep dropping. I can't recall seeing any other homes under construction anywhere in this area.

Restaurant business is down about 40% nationwide. That puts almost all of them underwater. No independent operator who has a lease will renew it when it comes up in the next three years or so, unless they can fund the operating losses from some other source. I expect about half of all the restaurants in California to close. When that happens, it will free up enough customers for the restaurants that stick it out.

I think we'll all survive. And we'll find ways to be happy. But I don't believe the economy will roar back in 2010 as the experts are fond of predicting. I think this is the new reality until some innovation comes along to drive another bubble.

One could argue that previous economic bubbles were driven by sex, directly or indirectly. Guys bought cars to attract girls. The VCR business thrived because of porn. So did the Internet. If you want to predict the next economic boom, figure out who is inventing technology that 19-year old boys will crave in order to increase their chances for sex.

Any ideas?
 
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Mar 4, 2009
If your criteria is getting 19 year old losers laid, you could always invest in Rohypnol and GHB. . .

(I wore my asbestos suit in preparation for the searing hate that is sure to follow that statement)
 
 
Mar 4, 2009
Aardwizz, re the 70's and 80's. Ever hear of dope? That was a low entry cost business, i do mean marijuana, and a few pot plants paid a lot of mortgages and have put a lot of kids through college, kept a lot of carpenters and small businesses afloat. But of course, it wasn't bragged about.

A shame and a scandal, but an earlier generation in the South turned moonshine money into NASCAR and a lot of other businesses.

Look up the name Junior Johnson. He has at least one building at a major upscale school named after him.
 
 
-1 Rank Up Rank Down
Mar 4, 2009
You hit it on the head with the sex drive driver.

As for the side comments, half your followers are idiots. Most of the rest are irrelevant or hope date not have beard.
 
 
Mar 4, 2009
IF you read your history, I recommend the book "The Big Rich" you can see that so-called Conservatism was a top down creation by Texas Oil people, especially H.L. Hunt, who funded Joe McCarthy, William Buckley and a bunch of " Grass Roots" organizations like the John Birch Society. FDR was riding high, and the old school Conservatives like Henry Ford and Luce were dieing off or had discredited themselves with Pro-German or Isolationist stances.

All well and good, but the only two things the Texas Oil guys wanted were lower taxes on the rich and something called the Oil Depletion Allowance. They got both.

Now, all these social Culture War things are more or less covers for the real message. Lower Taxes on the Rich.

That is Holy Writ, and anything else is socialism.

And BTW, I'm a small business guy, and you don't hear me whining. I get to write off everything, down to the cokes i drink in the shop, and pay less taxes now than i did when i was punching a time clock.

You think that makes me a Republican?

Not likely. I was a Goldwater Republican when i first got politically active, but now the Republicans have gotten so reactionary and hateful, i'm to the left of Obama, and i haven't changed a bit.

Reagan, Bush I, Bush II all front men for loonies who think taxes are an imposition on "their class of people" and think that only people who can't afford accountants should pay taxes.
 
 
Mar 4, 2009
Hi, Scott.

I thought you might be interested in this analysis (http://economix.blogs.nytimes.com/2009/03/02/foreclosure-rates-arent-really-that-high/) of the foreclosure rate by state. It looks like California has been, and will continue to be, hit particularly hard. In the paper they state: "66 percent of potential housing value losses in 2008 and subsequent years may be in California, with another 21 percent in Florida, Nevada and Arizona, for a total of 87 percent of national declines."

So, it may be that your view of the economic situation is affected by your immediate surroundings. Perhaps things won't be as bad as you think nationally simply because they aren't as bad as it seems right now.

Cheers,

Ted
 
 
Mar 4, 2009
I never took the bubbles to be based on sex, but on relative ease of entry into the marketplace.

The boom in the 80s was due to the relatively cheap PC clone. Any Mom and Pop could buy one for 2-3 grand, and start writing software.

The boom in the 90's was due to the even cheaper entry to the internet. Mom and Pop probably already had a computer; all they needed was a $75 domain, and they were in business. Ebay made it even cheaper.

The VCR business (Scott's example) was also fairly cheap to get entry into; certainly no more costly than any other retail business.

You can go back further. Henry Fords cheap cars allowed all kinds of mobiile services to exist. Businesses could readily expand beyond what could be delivered to a local neighborhood. With a larger client base, more marginal businesses could succeed.

So where is the next low-cost entry? eleph-ino (a cross between an elephant and a rhioncerous). It may be that there won't be one for a time. The 60s and 70s didn't have any, which is why the economy grew only slowly through those years (and you thought it had something to do with Vietnam, didn't you?) Maybe "energy efficiency" will be the answer. It won't take much capital to start a weather-stripping installation business (per one of the President's suggestions). Electicity generation at point-of-use (solar, wind) could take off (although its entry cost is higher).

Or maybe someone will do something absolutely new, like scientifically find a way to measure the chi energy that chinese medicine talks about, and thus making Dr. McCoy's medical tricorder possible, with a cottage industry of accupunturists and herbalists springing up, to help the aging populatoin and their health problems.

I'm sure that whatever it is, we'll be taken by surprise.

 
 
Mar 4, 2009
Humanoid Robots.
But Japan is beating us right now.
 
 
Mar 4, 2009
@Charlesfunnish

It's interesting that you thought I was thinking about you when I described some of the posters as political axe grinders. I wasn't, actually, but if the cap fits ... well, go ahead and wear it.

It's also interesting that you think that I said what I said because I disagree with your political views -- without a shred of evidence to support that conclusion. You have no idea what my political views might be; they might be identical to yours for all you know. I didn't express a political view ... I expressed a concern about the politicization of a critically important macro economic issue -- one that will not benefit from the distortion power of that particular prism.

Seeing the injection of vast of amounts of capital into the global economy, currently being undertaken by countries the world over, including America, as "socialism" -- well, that is a pretty good example of what I meant by seeing the world through a political prism.

But as you say, doing nothing was indeed an alternative to the action taken by the US Congress. Too late for that course now, however. The die is cast.

Webster
 
 
-1 Rank Up Rank Down
Mar 4, 2009
chuckfunn: Dude, put down your bullhorn, stop thumping your bible, and quit preaching...no one is listening. You don't seem to get it, do you? Belching out ridiculous statements about choosing no alternative plan before socialism is just that, ridiculous. Take your own advice given earlier here today and "get over your feelings and start analyzing rather than "feeling" them."
 
 
Mar 4, 2009
The economy will probably not be "fixed" by some miraculous new thing or idea or cute social change. Unfortunately, few things or ideas are new... The economic factors that got us into this mess are still being spurred on by instant gratification capitalism. The underlying principles have not changed and do not have any prospects of changing in the near future. Like gears without grease the economy will slowly grind down to a painful barely bearable pace. In three or four years War could very well be the thing that takes our minds off of our suffering and unites the country by giving us a common enemy to focus our pain/hatred against. After four or five years of hardship the country would welcome almost relish a large global war.
 
 
Mar 4, 2009
Maybe you've got it back-to-front. Social trends seem to have young people becoming sexually active earlier. Sex is just that much easier to get. Perhaps the economic bust is directly linked to promiscuity.
 
 
+3 Rank Up Rank Down
Mar 4, 2009
Phantom II: I read Atlas Shrugged in college as part of a readings in economics class. It wasn't the first time I had read that book either, and I think I've read it since. I've read pretty much all the books, not just novels, that Ayn Rand published, and they brought me to one conclusion: Ayn Rand was living in a fantasy world, and trying to apply her philosophy to the real world will surely result in disaster.

Sure, I admired some of her characters and what they stood for. But ultimately her conclusions are wrong. To her, everything is black and white, there's no in between, and anybody who disagrees is an idiot. Even her most famous disciple, Alan Greenspan, who was no doubt informed by her teachings, recently admitted that the model he used to understand economic activity was fundamentally flawed. (I guarantee Alan Greenspan is smarter than all of us here, and if he can admit to such mistakes, then maybe it's time for all of us to reevaluate our ideologies)

In fact, you could say the current economic crisis happened PRECISELY because people were acting too much like Rand's heroes. Little government oversight extreme greed unfettered markets is Ayn Rand's prescription for everything, and we certainly know where that got us.

That you really think all the great minds are taking their ball and going home, because of some personal convictions, is laughable. Of course, in Ayn Rand's world, and apparently yours, it's as simple as all that. Never mind the fact that are all kinds of breakthroughs being made in medicine, energy, physics, etc., all the time.
 
 
Mar 4, 2009
Too much government! Just increasing taxes on small businesses depresses and slows production and thus lowers the amount of taxes they would pay if they were humping to be last year's sales... I know several small business owners who are just not going to produce as much as they had because they don't think they can sell as much and they don't want to pay more taxes.

But what kind of car did you buy? Did you get a good buy on a Corvette? Can you imagine a world without a Corvette. Oh my gosh, I wonder if I can buy one before they are all gone? Scott you make me realize the important things in life. zoom zoom.
 
 
+7 Rank Up Rank Down
Mar 4, 2009
Hogbert: I see that you have had the gall to increase my salary from $250,000 to $280,000 without my permission. What were you thinking?

Ratbert: I was thinking you deserved a raise.

Hogbert: Fine. But do you realize that my marginal tax rate is higher on the $30,000 salary increase component than it is on the underlying $250,000?

Ratbert: Yes.

Hogbert: OK then. But don't ever do this again without giving me an opportunity to object to the raise. OK?

Ratbert: I'll keep your attitude in mind.
 
 
+4 Rank Up Rank Down
Mar 4, 2009
@Stomper

Well said, Stomper. Among all the arguments (good, bad and indifferent) I've heard raised against repealing the Bush administration's tax reduction for those earning over $250,000, the prediction that people in this income range will throw their collective hands up in despair, en masse, and stop doing all possible to earn more money ... well, its a ludicrous argument.

Webster
 
 
+3 Rank Up Rank Down
Mar 4, 2009
please please please someone develop a holodeck.
 
 
Mar 4, 2009
wow... A lot of optimism about people changing their viewpoints and not going back to hyper-spending. I'm going choose to believe that people have not changed. As soon as things look better, they will start spending again...
 
 
+1 Rank Up Rank Down
Mar 4, 2009
re: The value of the new house you're building... True, the market value of it may be sinking, but based on what you've said about it so far, I'm not sure I see how that would matter.

Sure, if you're planning on trying to sell it any time in even the remotely near future, yes, I can see where it being worth less than you paid for it would be an issue.

But from the way you described the careful design of it, it sounded as though this is a place you plan to be for quite a long time.

Am I wrong or is there something I missed?
 
 
Mar 4, 2009
Stomper: while I'm not about to defend Phantom's knowlege of economics (or lack thereof) I have to wonder if math was your best subject either...

even applied to marginal income it makes less sense to work more beyond $250K. in a job w/nearly perfectly elastic income (i.e. 50 hrs => 125% gross income of 40 hrs) as the marginal rate rises (and let's not forget deduction caps are simultaneously lowering not to mention the inevitable lifting of the FICA cap) net (keyword being _NET_) income per hour still decreases. now in practice very few jobs have linear hrs/income curves (ex. I'm a DBA - I can't work 36 hrs/wk for 90% pay though I'd glady take such an arrangement) but some very important ones (ex. most MDs) do. since incremental marginal hours are progressively more valuable to the worker (i.e. going from 50 to 60 hrs/wk is harder on family than going from 40 to 50) making those marginal hours yield progressively LESS net income is most assuredly a DISincentive to productivity. granted, there is no universal intersection/tipping point - everyone has to decide what's right for them - but to say there is nothing to be gained from staying below the threshold of a hypothetical 100% marginal rate is, um, well, there are no polite words to describe that... if anything is going to dampen this effect (& it probably will) it will be the fact that far more jobs have extremely non-linear hr/$ curves (i.e. if you're salaried they're generally not going to let you work 36 hrs for 10% less pay).
 
 
Mar 4, 2009
How bad is it? I live in Austin TX. There have been some layoff's and belt-tightening, but there are still a 30min wait to get into most restaurants on a Sat night. The stores are doing business.

It appears some areas are worse than others
 
 
 
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