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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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+7 Rank Up Rank Down
Mar 4, 2009
It's interesting (to me) that a topic like this causes so many people (like Phantom) to see an opportunity to sharpen their political axe ... to further their political ideology. As if the entire world must be viewed through the prism of party politics and political ideologies.

This topic really has nothing to do with politics, except to the extent that government (both Republican and Democratic regimes) has occasionally been enablers (inadvertently) of mindless consumerism (see my earlier 'induhvidual economic theory").

How so? For instance ....

Those legislators who weakened regulatory oversight of the financial sector (yes, Wall Street) in America inadvertently enabled the creation of absurdly arcane financial instruments that helped fuel the hyper consumerism fire -- helped sustain the myth that everything would be aright as long as consumers continued to spend more and more on ... whatever.

Those legislators who enabled and encouraged mortgage lenders to bend and tweak prudent loan underwriting criteria, so to bring more people (voters) into the world of homeownership, also inadvertently stoked the fire.

Are such actions the product of Republican or Democratic ideologies? Only in the following sense:

Republicans are prone to believe that any form of management of the economy (free enterprise) is fundamentally a bad thing, contrary to the health of the economy. Unrestrained, this is a stupid and dangerous ideology.

Democrats are prone to believe that the economy should be managed in a fashion that produces social justice and equality. Unrestrained, this is a stupid and dangerous ideology.

Webster
 
 
Mar 4, 2009
There is no such thing as a consumer-driven economy.
If there were, we could have had great economic growth during the Middle Ages.
During the middle ages, people had the more reasonable view that economic growth was impossible, and you got stuff only by taking it from other people.
During the colonial era, people believed economies could grow if you found new resources overseas and took them.
In the modern age, we learned that economies CAN grow without taking anything from anybody. They do NOT grow by having everybody decide to buy more stuff. They grow when you LEARN something, or when you invest in INFRASTRUCTURE.

This learning can be new technology - how to make something more cheaply, harvest something more cheaply, etc. It can be management techniques - how to organize people more effectively, make interchangeable parts, assembly lines, etc. It can be economic insights - making loans and charging interests, creating a legal entity called a "corporation" to encourage investment, having insurance, etc. And it can be political insights - new ways of governing that make production of goods safer/easier/cheaper.

You can also grow an economy with infrastructure investments - build roads, build schools, hospitals; provide sanitation, plumbing, mail delivery, electricity, etc.

IMHO the best thing we could do is to create a National Institute of Economics, and give it $10 billion a year to figure out what we should do with the rest of our money.
 
 
+2 Rank Up Rank Down
Mar 4, 2009
Yo chuck, re-read the first sentence in my critique before you pile on your "you are a commie-loving Obama supporter" crap. If phantom ii wasn't such a blowhard, he might be taken more serious. He reminds me of a evangelist standing on a corner yelling out "you-are-going-to-hell-if-you-don't-repent" pounding on a Bible. I don't like the evangelist's style either, even though I may agree (in part) with the message.

Now go invent a hookerbot and end this economic malaise, would ya?
 
 
Mar 4, 2009
Did you buy your car? Which one? (I know if you intended on writing that on your blog, you would not use the word "vehicle")...And then your entry also talks about why men buy cars.....well
 
 
+5 Rank Up Rank Down
Mar 4, 2009
Just a POST SCRIPT for my induhvidual economic theory.

It's a cliche these days, but a lot of the short term effect on the economy is being created by a natural reaction on the part of consumers ... I'm talking about the 'consumer confidence" issue.

That is a common issue to content with when the economy turns sharply, as it has many times in the past.

But I think the pause in spending that we are looking at today will not follow the same recovery pattern as in the past. I think that many consumer are actually pausing to rethink things this time around. I believe that many are starting to think more about the stuff they "need" rather than what they "want", or have been told that they want. If I'm correct in this assumption, then the smarter, more agile manufacturers of consumer goods will begin to think about changing their product offerings to the new demand pattern.

For instance, will consumers still have an appetitive for overpriced dishwashers with control panels that would impress a Nasa space shuttle pilot? I think not. I think consumers will become more inclined to select a dishwasher based on simpler criteria. Does it wash dishes? Is it a durable product? Is it ... and this is a question that long ago slipped out of fashion ... is it readily repairable by anyone outside of Asia?

Webster
(Induhvidual Economist)
 
 
Mar 4, 2009
Sex bots are the answer.. Robots for the next decade, then biobots after that.. I heard somebody say that robotics now is where the personal computer was in 1990.. Today, a bunch of geeks making kits, and a few consumer products like the Roomba.

Next year?

 
 
+3 Rank Up Rank Down
Mar 4, 2009
Hookerbots, indeed. Perhaps travel size?
 
 
+1 Rank Up Rank Down
Mar 4, 2009
Charlie Funnish - It's not so much that he is wrong, he's not; it's that he presents like he is the all-knowing-all-wonderful Oz. When in reality, he is just parroting comments made by many others with unoriginal metaphors. I realize that this is amateur hour on here, but the arrogance on display in his comments rubs more than one person the wrong way.
 
 
+8 Rank Up Rank Down
Mar 4, 2009
When it comes to economics, I'm a classic Scott Adams "InDUHvidual", but that doesn't stop me from developing ill informed opinions. In fact, developing ill informed opinions is what induhviduals do best. ;-)

Here's my theory:

The so-called bursting of the real estate bubble was simply the proximate cause of the global economic conditions that we are looking at now. This was more of a "last straw" event ... the one that broke the economic camels back, so to speak.

The real cause of the global economic crisis is the bursting of the "hyper consumption bubble".

By this I mean that the growth of the global economy has long been "driven" by consumption -- driven by an apparently insatiable need on the part of consumers to buy stuff, lots of stuff, all kinds of stuff. The balance of trade between the US and China is a handy metric for this phenomena. China produces vast !$%*!$%*!$ of stuff, cheaply. North Americans consume it, voraciously. Lou Dobbs is furious about the trade imbalance, but doesn't have a clue about its true significance. In a Lou Dobbs world, the answer to the trade imbalance is for Americans to somehow, magically, produce all the stuff that China produces ... at the same price. Lou Dobbs is what Scott Adams might call an "expert induhvidual".

The connection between the "hyper consumption bubble" and the "real estate bubble" is a subtle but important one.

The real estate bubble was created by consumers who were tempted into a) buying homes (a form of stuff) at values that were beyond their means and/or b) converting large amounts of home equity into cash ... for the purpose of buying stuff, lots of stuff, all kinds of stuff, including stocks, which, ironically enough, could only prosper on the slippery surface of the "hyper consumption bubble"

I have a parallel theory that places the blame for the global economic crisis squarely at the feet of large screen plasma/LCD televisions, but I won't go into that right now.

So, I agree with Scott. The economy will be repaired ... but the repaired version won't be the same sort of economy that we have become accustomed to over the past 20 or so years. It will be a more ... reserved, much less hyper economy. And that is the thing that will take a long time to get used to -- and certain business sectors, particularly those whose business model was dedicated to satisfying what was once an insatiable demand by consumers for new stuff, lots of stuff, all kinds of stuff ... well, they will suffer longer, and many of them will perish.

Webster
(Induhvidual Economist)

 
 
0 Rank Up Rank Down
Mar 4, 2009
Phantom ii - I bet you are a big hit at parties. I am certain you must get invited to multiple social gatherings every week and you must have a hard time deciding which to attend. I am also guessing that lots of important people have you in their T-Mobil favorite 5 plan waiting for you to provide wisdom. Do you and Rush hang out on the weekends? I have been so misinformed about you...
 
 
Mar 4, 2009
"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."

So the next economic boom is going to be driven by AXE Body Spray?
 
 
+3 Rank Up Rank Down
Mar 4, 2009
"If you haven't done so already, you should read Ayn Rand's classic "Atlas Shrugged." I can guarantee that none of you ever were given it to read as an assignment in college."

I would certainly hope that the colleges and universities people are going to aren't assigning high school level reading material like Atlas Shrugged. If you're going to be so smug at least get things right, but then again I probably have more thumbs than the number of things you got write in your post. Go troll somewhere else.
 
 
Mar 4, 2009
Phantom II is so misinformed, it's scary.
 
 
+2 Rank Up Rank Down
Mar 4, 2009
Hookerbots.
 
 
Mar 4, 2009
The recession will decrease the demand for real estate and so lower rents.

Also, a high unemployment rate would lower the demand for unskilled labor and so reduce the wages that restaurants have to pay many employees.

Finally, restaurant owners now have fewer profitable ways of spending their time and so the implicit cost to them of staying in the restaurant business will fall.

Although the recession will reduce the number of people who eat at restaurants, it will also decrease the number of customers a restaurant would have to attract to stay in business.
 
 
-1 Rank Up Rank Down
Mar 4, 2009
American blue jeans and vodka seem to be teen favorites in most other cratering/cratered centrally planned socialist states. Why not in ours?

Tell Levi Strauss to fire up the mills!
 
 
Mar 4, 2009
Welcome to the wonderful world of central planning, Scott. And it's only going to get more wonderful from here.

Remember how you used to rail against the evils of business? Well, how about the opposite: well-meaning idiots in government who get to spend wealth that hasn't been created yet. Did you know that president Obama has asked to spend more money in his first six weeks in office than has been spent by the federal government since the founding of the country? And what's the result?

ABC News reported that many upper-income taxpayers are already planning to cut back on work and investments in order to stay below the $250,000 threshold to avoid the president's punitive taxes on the productive. A new study says that 100,000 Indian citizens who are working here are planning on returning home because the job situation here is so bleak. Ditto the Chinese.

New taxes of $1.4 trillion are targeted at the top 5% of earners - you know, those evil guys who formerly invested their money in order to create new jobs and fund the new ideas of America's entrepreneurs. Of course, it should be noted that the top 5% of earners already pay 60% of the income taxes paid, but hey, we have to be fair and tax them even higher, right? Not to mention the $649 billion of new energy taxes, which is guaranteed to drive up gas and other energy prices, hitting the middle class right in the pocketbook. It's a hidden tax that will hurt us all.

And now, we're taxing unborn generations. The generation who spent this money will never have to pay it back - they'll have died and passed the debt onto their children and grandchildren. It's like taking out a credit card in your grandchild's name, running it up to the max, and then handing the debt to your grandchild. Sort of like a reverse inheritance. But don't worry - it's perfectly fine to do that. It's just what liberals call "fair."

What Investor's Business Daily calls this is "capital on strike." Banks are refusing to lend; investors are refusing to invest; capitalists see the socialist handwriting on the wall and are looking to other more capitalist countries, such as Communist China and Russia, to invest in.

You know what the road to hell is paved with. Now you're seeing an attempt to kill the US economy by killing the capitalist system, in the wolf-in-sheep's clothing guise of trying to save it. Just think: pretty soon we'll be a worker's paradise, just like Cuba, Venezuela and the old Soviet Union. We all know how wonderful it is to live in those kind of countries, don't we? All we have to do is ask millionaires through parody Sean Penn, Michael Moore and Susan Sarandon. Those glowing stars of intellect have all told us, and we believe them, right?

Well, get ready, folks. The train is on the track and the throttle is blocked full open. The abyss awaits, and we're running toward it as fast as we can, with our eyes wide open.

If you haven't done so already, you should read Ayn Rand's classic "Atlas Shrugged." I can guarantee that none of you ever were given it to read as an assignment in college. Too busy reading "Das Kapital" and the biography of Che Guevara and Fidel Castro, I guess.

You can get it at your local library. It was written in 1957, and talks about just what is happening now: capital deserting, the best minds going on strike because they feel their investments and use of their own mind will be stolen from them and used against them. You won't find yourself rooting for the looters and the moochers, I guarantee you. And it just might wake some of you up.

It's not too late, but it's close. We need to stop spending, cut taxes, and encourage capitalism, growth, entrepreneurship and business health. To not do so is to kill the goose that laid the golden egg.
 
 
Mar 4, 2009
You are a glass half-full kind of guy, aren't you Scott.

Not sure why you live where it takes four years to buld a house because of government requirements, but that is definitly an issue, and the core issue of our problem. Way Too Much Government.
 
 
Mar 4, 2009
I think your perception is colored by your location. Here in my neighborhood in Texas, we have builders still building new houses albeit at a much slower pace than last year.

If your looking at the next innovation in sex, there are some states that are cosidering taxing legal prostitution as a revenue source. This will make it much harder to criminalize it in areas (Nevada and Connecticut) where it is legal. This increased tax revenue will allow the state to spend more without raising income, sales, or property taxes which will draw more people to those states which will prompt more states to consider legalizing prostituion. Also, legalizing and taxing pot may also gain popularity to help spur the economy.
 
 
+1 Rank Up Rank Down
Mar 4, 2009
"previous economic bubbles were driven by sex" , it's sort of true.
but that applies to men only, how about women?

I think the previous econ bubbles were due to easy money from stocks and housing market. It created lots of jobs in the process, but many jobs do not really produce goods for long term.
It also created lots of wastes in the system everywhere.
Now we need to eliminate wastes even though it meant reducing the number of jobs, or shifting jobs to more skilled ones.
It will take at least a decade for the economy to recover. Anyone talking about 2-3 years is dreaming.
 
 
 
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