What starter the Great Depression and what we can expect.

[imaspaceguy90 10+ year member]

I know you all prolly wont like to hear this but probably already have. That wether its bush or just the entiere government or us, the US economy is falling slowly and steadily and unless we stop putting money into foreighn resources such as foreghn cars and oil, it will probably remain falling. (EX.) Gasoline, Honda,nissan. .Its just a Matter of time untill we hit the new depression unless we take action.

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[Rmsanger 10+ year member]

lol go to bed man! Coming here and posting a chart of our FX with the Euro and talking about some depression doesn't mean squat man. You now have as much credability as the Pres when talking about the economy. At least use the Dollar Weighted Index where it is compared against all of the major currencies and that still won't mean zip. You should do your homework and look at the LEI index, Inflation, GDP Growth, Consumer Spending, Foreign Direct Investment (FDI), and Treasury Issues.

 

[maldecido33 10+ year member]

a depression is inevitable regardless of who is in power in the US

historically, there is a depresson that affects the world ever 20 years or so. while few are extremely devastasting such as the Great Depression, approx every 20 years the world population suffers a giant depression, typically cause by the devaluation of money because of inflation. the market will correct itself over time, we'll be fine for 20 years, and it'll happen again.

wanna get into it more? i'll be back later after school, so pm me

 

[Rmsanger 10+ year member]

a depression is inevitable regardless of who is in power in the US
historically, there is a depresson that affects the world ever 20 years or so. while few are extremely devastasting such as the Great Depression, approx every 20 years the world population suffers a giant depression, typically cause by the devaluation of money because of inflation. the market will correct itself over time, we'll be fine for 20 years, and it'll happen again.

wanna get into it more? i'll be back later after school, so pm me

Not once in my post did I state that depressions don't or will occur in the near future. I was simply stating that throwing up some 5 year historical chart of the relationship between the Euro/$ does not mean anything related to business cycles.

And FYI in your post you should change the word depression to recession. A recession (part of the normal business cycle) occurs usually every or every other decade across the globe. Depressions usually only occur once a century and have been commonly been related to epidemics such as plague and other sweeping illnesses.

By stating that Depressions occur because of the devaluation of money is simply false. The value of money is only a measure of several underlying indicators in the world (inflation, consumption, productivity, interest rates, etc..) and does not cause any change in the business cycle. The underlying factors are what cause the recession and an eventual depression. The largest current threat for a global recession is a supply shock to the Oil Supply (either natural or by terrorist attack). This would criple productivity and inflation would shoot through the roof.

 

[pwnt by pat 10+ year member]

A US only depression/recession doesn't have that much to do with lack of domestic inventment as it does with domestic subsidies, specialization, and import taxes. If you pay domestic companies to produce or not produce to compete with foreign companies then the resources are not well spent.

example: if you pay an American car manufacturer $1000 a car to lower the sale cost below that of a foreign compaines compairable car, what's the incentive for the american company to produce higher quality goods or make production more efficient? There isn't because they know that if the price difference slips, the government will just give them a higher payoff. In the end, who's the winner? The american people get lower quality products from domestic companies, the companies lose sales becuase of the lower quality products, the foreign companies lose becauase they don't get the sale.

example 2: Everyone complains about outsourcing, but everyone knows why: it's cheaper to send work overseas? Why is that? because Americans are used to living the way they think they should. Everyone feels that they're worth more than they are and live outside of their means. I've seen multi-million dollar homes with a family of three living in it. Sure it's a nice home, but they can't afford furnature. If people would realize the value of the work they do vs. the quality of the work they do, they would be extremely disappointed.

It also has to do with how many people are in a job field vs salary. If you have 10 million people wanting to be a janator, the salary of a janator would decrease to match the influx of workers. If 2/3 of the country wanted to be astronauts, they wouldn't pay as much and the salary of all other jobs would increase. Exmaple 2.a: illegal immigrants. They work hard for low pay because 1) they want money no matter what and 2) they do the jobos nobody else wants and 3) there's so many, the employers can afford to pay them less and still get the same quality of work

The problem with all of this is nobody wants to do what they can to take a competative advantage. Whether it means streamlining production or delevoping something new and unique. Everyone wants to keep pushing the same job for the same pay even though someone else can do it cheaper and more efficiently.

Import taxes also cause a huge problem along the line of subsidies. They jack the price up for importers, allowing domesitc producers to charge more for similar quality products. The taxes also stop foreign producers from importing as many products (forcing the domestic companies to become yet more efficient), raising the prices yet again, and dropping quality.

Exmaple 3:

Do you really think a Cobalt would cost as much as it does for the quality (or lack there of) if they weren't subsadized (above) or weren't competing against foreign competitors whose prices have been raised through taxes?

If you say "well they can sell it for less and get more customers that way". There's two problems with that. 1) it's voodoo economics (lowering taxes to increase sales) and has been proven on SEVERAL counts to be incorrect 2) the domestic producers are going to sell the product for as much as possible, the same amount importers have to sell for, because they know they can get it.

In a perfect world, there would be no import taxes and no subsidations. People would be intelligant enough to specialize in production and efficiency and have the ability to adapt to market changes. Too bad most people are stubborn and refuse to actually learn/do something new when problems arrise.

There, my 20 minute economic paper. Enjoy.

 

[HiAmplidude 10+ year member]

I'll throw in an opinion about big companies sending their labor over-seas. The US allowing/encouraging that at a large scale is shooting itself in the foot.

Sure, it costs a company less to employ barely-English-speaking Arabs, but those American jobs they replaced also decreased those Americans' income and spending, which is how most of those companies exist in the first place (Dell?).

The other thing it does is increase the number of skilled workers looking for jobs, making the job market naturally less lucrative and will start to pay less and less, further decreasing income/spending across the board -- even to those employees not directly affected by outsourcing. For example, if there are suddenly a thousand skilled workers in a city all looking for work, but there are only 3 positions available for that kind of skillset, those educated people will be willing to work for McDonalds just to pay their bills. If a skilled position at, say Verizon, opened up at McDonalds' pay-rate, darn sure that person would rather do tech support than holding down the drive-up window at the same salary. Companies catch on and start offering positions at far lower salaries and actually fill them. Do that at a large scale across the country, and you create a huge decrease in the amount of money being earned, thus spent in the consumer market.

Companies who exist and rely on average consumers' spending will see less and less business, driving their prices down, salaries down, employee-base down (lay-offs)... further decreasing the potency of the money-earning/spending consumer. The downward spiral cannot reverse itself, once it's in motion.

I guess one thing can be said for large-scale outsourcing... it will inevitably slow or decrease inflation. durdeedurdeedur....

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I'll also throw in... the company I work for has recently started a drive for outsourcing. They've already hired up an untold number of Arabs for a number of different positions including software development and tech support. As far as I can tell, they haven't replaced American jobs yet, but everyone knows that's the ultimate outcome, so stockholders see bigger returns due to higher company profit margins. My guys fear for their jobs, and for good reason. We're in the tech industry. I fear for my job and I've been doing it for a decade.

On another note, every experience I've had with tech support in India has been a negative one. Sure, they're getting paid 4x less than American workers, per hour, but it takes 4x longer to solve the friggin' problem due to disconnects in the dialect. I have absolutely nothing wrong with Arabic people, but when I need to get an urgent issue taken care of quickly, I really want to understand the person I'm working with.

/rant

 

[pwnt by pat 10+ year member]

My example 2 is the response to your rant //content.invisioncic.com/y282845/emoticons/wink.gif.608e3ea05f1a9f98611af0861652f8fb.gif

While outsourcing does lead to higher unemployement of skilled workers, those skilled workers should be able to adapt to the marketplace and find another way to offer their services.

Also, after enough people complain about "tech departments" overseas, the us compaines will listen. It's just a matter of time.