How low will it go

[terryl965]

I was listening to the news and once person said the worst is over and the economy is stablizing. Who really believes this when we are bailing each other out, how can it be stablizing when the American dollar is going lower? I find this rather agnoringto me and I would guess the regular person from the street, what soes stablizing really mean for the average person? Who is being stablized here middle class or the rich? What about food pricing, everytime I need to buy grocery I just want to die with the cost of everything.

I really need to try and figure out this stablization they are talking about.

 

[exile]

Terry, as far as I can tell, nothing is stabilized yet. What's happened is that the huge infusion of $$ into the financial system has led to a small increase in the availability of cash in the economy, so people can get loans and operating capital. Things are still very fragile. The damage done in the financial sectors has had impacts on things like manufacturing and construction, which are enormous engines for the US economy, and even if a tentative recovery in the financial sector has been engineered, that doesn't translate into instant recovery of the productive parts of the economy.

It's like, if you have a severe bacterial infection that attacks your circulatory system and certain vital organs. They can save your life, maybe, with weapons-grade antibiotics in massive doses. But the injury to your blood vessels, kidneys, skin, whatever... that takes a lot of time to heal, and can worsen even after the culprit bacteria has been beaten back. We're in for a rough ride. The Wall Streeters know it, too—2.5% lower on the Dow today, and even more on Nasdaq.

 

[terryl965]

See that is what I thought but some of these news people are talking like we are recovering, I know in my area everything is high and jobs are low, so this cannot be stabilizing.

 

[exile]

See that is what I thought but some of these news people are talking like we are recovering, I know in my area everything is high and jobs are low, so this cannot be stabilizing.

Terry, my reading is, there are structural problems in the economy that have been building for a while, and things are going to get way rockier before we're on a sound footing again. One of the stories on the Yahoo financial menu was about how this Christmas is likely to be one of the lowest-spending since records started being kept. Reason: no one has any cash. Private sector debt is so huge now that the credit crunch means people are barely financing their mortgages, let alone ponying up $$$ for fancy gifts for second cousins.

Everyone wants to hear good news. So far as I can tell, the only good news is just this: we have suddenly realized that there's a problem, a big one, and we're probably in more of a frame of mind to take our medicine on it than we've been for a long, long time. It's still going to taste bitter, though, especially to upwardly mobile neo-yuppies who lease 600-series BMWs and then forget that they really don't own them...