850 Billion Dollar Stimulus Package

In deed they are, but they are closely linked.

 

All those factors are what caused our country's sentiment at the time, which is what ultimately lead to the recessions.

If perception were not so important, the government would not try so hard to control it - same thing with CEO's.

People are not rational beings, and this is economic "science" is flawed.

 

Stop it. Next thing you know, you'll be saying this isn't all Dubya's fault.

We can't have that kind of talk in Obamanation... (I get the copyright on that )

 

Any comment, Red?

 

W. Bush made the same mistake as Greenspan, and many other educated fellows, in believing that companies & industries could regulate themselves better than the government could.

This is only partially true. Competition acts as a sort of regulation which works better than any government agency could, but certain factors (like transparency & disclosure) must be required by the government because companies have no inclination to do it otherwise.

 

Cparso is absolutely correct. It's a basic concept in any Finance class. Well, a recession isn't all psychological, but it plays a huge role. Of course, just picturing what would happen if the DJIA wasnt released should be enough evidence.

 

I believe all economic factors influence psychology to differing degrees, but psychology is the ultimate driver.

Now, don't get me wrong, people can be fooled for a while but ultimately people's psyche will fall in sync with the economic factors that are the "source" of the issue.

 

Unfortunately the answer is that the government is going to keep the presses rolling in an attempt to print our way out of this mess. It may seem to work short-term (although evidence already surfacing suggest otherwise); however, the end result will be rampant inflation and debasing of the dollar.

We are fortunate that our major competitors are also in a jam, thus keeping our currency as the main form of valuation to essential products such as oil. Once the folly is up and the switch is made to another currency, watch out! That would be a good time to stock up on any form of ammo available - IF it's available.

Taxes may not get raised for a couple of years, but they will - bank on it. The lack of funds for local governments due to falling home prices, and lack of overall sales taxes will probably be first - in the form of higher sales taxes and property taxes. The federal government is already struggling with an unsustainable highway system that relies heavily on fuel taxes (demand which is falling as we speak) - they are already trying to concieve a GPS based mileage tracker to be implemented within 10 years to combat the increased effiiciency and decreased fuel demand. Once the treasury is looted to pay the crooks on wallstreet, bankers, and corrupt CEO bonuses and outrageous salaries, coupled with unemployment benefits (which will hit Double Digits by the end of 09) - we will be in a jam, big time. God help us if any of "more than likely unsurmontable debt/deficit" that our "leaders" have accumulated in the past 20 or so years is demanded by the countries that lent us that debt.

The real "tax" will be inflation that will rob the few responsible Americans out there who worked hard to save what they could. This silent wealth killer will take what some worked hard for, to pay for the ones who lived their lives in a drunken debt binge. All of this is because the federal government probably knows that the majority of Americans aren't willing to pay for theIr sins of overconsumption and greed.

This foreshadowing has been visible for some time, but in true American Style - most were too lazy to listen or even research! In fact I was reading a book that predcited the housing debacle back in 2003. My wife and I cashed in all our equities back in March (just missed the record high S&P of this past summer). I still trade - but it's more of a hobby for fun than anything (the main focus is capital preservation the gains are just a plus). Things have gotten much worse, much quicker than I thought and we've eliminated all debt besides our mortgage, in addition to building up a 6 month cushion - which probably won't be enough if things get bad enough, but we're still adding to it. There is still time for a lot of folks out there, but most won't listen (or won't be capable) until it's too late.

THE FUTURE IS BRIGHT....

 

Great post, you are on the right path. With the money supply creation (and this has been too high since 01) and presumed return of inflation after the recession induced deflation we have seen in energy and home prices, the question will be if you have saved money for your retirement, how do you keep its purchasing power? I don't have this totally figured out. In 03 I put 2% of assets in gold coins, which have gone up about 15% a year from 400 to 850. They grew faster than anything else I had, I sold a few at average price of 850, and what I have left is now 3% of assets. As currencies lose value, gold rises since it cannot just be printed out of thin air. I now trade gold a little via GLD, the exchange traded fund that holds gold bars.

You can buy foreign stock funds, but they seem to be 100% correlated with the US stock exchanges, so they are not a buy right now. After real estate prices come down, a piece of rental property will probably be good, as it would rise with inflation, and if you get it cheap enough, can make money on the rental itself.

From Australia:

http://www.news.com.au/dailytelegraph/story/0,22049,24894346-5014099,00.html

We have also never seen money printing such as we have going on now, the deficits run by Bush to fight a war without raising taxes, the $700 Billion TARP, and the stimulus package to come from Obama. That is the case as to why the bull market in gold that began in 2002 is not over yet.