[Choux]

NEW YORK — "Even the experts don't quite know what's going on."

Speaking to a number of those experts Friday, Paul Volcker, a top economic adviser to President Barack Obama, cited not only the lack of understanding of the global financial meltdown but the "shocking" speed with which it had spread across the world.

"One year ago, we would have said things were tough in the United States, but the rest of the world was holding up," Volcker told a conference featuring Nobel laureates, economists and investors at Columbia University in New York. "The rest of the world has not held up."

In fact, the 81-year-old former chairman of the Federal Reserve said, "I don't remember any time, maybe even the Great Depression, when things went down quite so fast."

He noted that industrial production is falling in countries across the globe faster than in the U.S. one result of the decline caused by the breakdown of unbridled financial markets that operated on a global scale.

"It's broken down in the face of almost all expectation and prediction," he noted.

Volcker didn't offer specifics on how long he thinks the recession will last or what will help start a recovery. But he predicted there will be some lasting lessons from the experience.

"I don't believe it will be forgotten ... and we will revert to the kind of financial system we had before the crisis," he said.

While he assured his audience of his confidence that capitalism will survive, Volcker said stronger regulations are needed to protect the world economy from such future shocks.. "

________________________________________

Are you ready for Hard Times worse than the Great Depression?

[andrewc24301]

While I will say this looks to be the worst economic downturn SINCE the depression, The great depression itslelf seemed to be FAR worse to me.

During the great depression, one in four Americans (25%) were unemployed, during a time when there was no social security, no welfare programs, no unemployment, food stamps, etc.

Even in the absolute worst case scenario, you still have access to various charities welfare, food stamps, etc. Nobody goes hungry unless you just want to.

I watched a program called "Black Blizzard" on history a while back. Very informative. And to see some of the conditions those in the dust bowl lived through is horrendous. Children dying because there lungs were full of dirt. No food, water, no money, no prospects, no government programs what so ever. Just you and a dry barren land.

It wasn't any better in the big cities on the east coast either, with the unemployment I mentioned earlier. Soup lines, people literally living out on the streets by the thousands.

I've spoken to a lot of eldery who lived through the depression, and they chuckle when someone tries to compare what we're going through now.

But the depression created an entire generation of people who learned to live within their means. These are people who can stretch a tight grocery budget. You'll notice these are the people who purchased a SMALL house somewhere and lived in that small house (less than 1000 sq ft) and raised a large family for the rest of their life.

Contrary to the generation of today who has to live in lavish homes with fancy cars, credit cards, computers, vynil siding, etc. Of course they can't afford all of that. You can ride through the windy country roads around this region. You will see the fancy split level houses with the three car garage and the 3 acre FRONT YARD, with lovley birch trees lines around the perimeter of the property. A great majority of them have "forclosure" or "for sale" signs in front of them.

Now travel a few more miles down the road, and you see the old 70 year old houses, small homes, slighty unlevel, wood siding, an old 80's model dogde sitting on a dirt driveway. Out front an old man mending a gutter on a rickety ladder, and an the wife checking the mail. One thing you don't see is a bank foreclosure sign in THEIR front yard.

[Wondergirl]

Contrary to the generation of today who has to live in lavish homes with fancy cars, credit cards, computers, vynil siding, etc. Of course they can't afford all of that.

The worm is beginning to turn. In magazines and newspapers now are articles about how to save money on groceries, clothing, and amusements. There is lots of information about "going green" while cutting costs. In one of today's papers was a front-page article about clothing thrift shops; in the other paper was a section on building small homes cheaply and "green" but with lots of livability and space.

Public libraries are back in vogue, with more people applying for cards than ever before.

[andrewc24301]

The worm is beginning to turn. In magazines and newspapers now are articles about how to save money on groceries, clothing, and amusements. There is lots of information about "going green" while cutting costs. In one of today's papers was a front-page article about clothing thrift shops; in the other paper was a section on building small homes cheaply and "green" but with lots of livability and space.

There's lots of things you can do, we just have to learn how to live responsibly.

A family of three or four does not need a 2,000 sq ft house. Bedrooms don't have to be 30X30 feet. We don't need 12' cathedral ceilings. If I were building a house now I'd made the bedrooms as small as legally possible, and make the ceilings as low as code would allow. Why? Higher ceilings is more cubic feet to heat and cool.

All of our clothes come from the good will. All of our food is store brand, and we also grow a garden on top of that. We live in a small 60 year old house in a run down town in southwest VA, but our housepayment is very small, and we are making it just fine.

[Wondergirl]

There's lots of things you can do, we just have to learn how to live responsibly.

I can outdo you. I live in an 800-900 sq ft two-bedroom, one-bathroom starter home, 1920 bungalow, bought in 1972, has housed four people and a variety of cats (now three adults and four cats), and has now become our retirement home. Our mortgage was paid off years ago. We're within about a mile of shopping, doctor, dentist, Dairy Queen, church, school, funeral home, post office, and restaurants. (In other words, we can walk to any of them.) We are on a hundred-foot wide lot with a huge backyard. We can wear clothes we've had for years. Life is sweet.

[tomder55]

one result of the decline caused by the breakdown of unbridled financial markets that operated on a global scale.

How could that be ? Even if you buy into the false premise that American financials were unregulated ;are you now arguing that across the board ,the world financials were also unregulated ?

Are you ready for Hard Times worse than the Great Depression?

Volker of all people should understand that in no way is this as bad as even the 1970s... yet.

However ;if things get as bad as the 1930s I do not believe most people in this country have the fortitude.

I have to say that Volker is a good appointment by Obama. He and Reagan made the tough choices in the 1980s to kill the Carter recession/inflation. He took a lot of heat for it ,but his and Reagan's strong dollar policy was right on. Sometimes you just have to ride out an economic downturn . (there... another Dem I spoke well of )

If he can convince the Keynesian on Steroids Obama that then he will do this country a service. (I wonder if President Obama will tone down his "failed policies of the last 30 years" pablum now that Obama has selected one of it's architects?? )

On a negative note ;he screwed up the UN Oil-for-Food investigation badly .


Another thing that Volker said that made sense back in Sept. when this became critical mass was to resurrect the RTC . Let the banks fail .Use TARP to get possession of the assets. RTC made the government money in the long run and does anyone miss the banks that went down ? Resurrect the Resolution Trust Corp. - WSJ.com

[tomder55]

70 year old houses

Mine is a 1920s Wardway . But I have made improvements on it since I purchased it . I love old homes!!

[andrewc24301]

1950 house here. 700 sq ft, two bedroom on the main floor, and a third "finished attic" room which qualities as a third bedroom on the second floor. For a total of about 800 sf total living space. I have two town lots, each is 50X100 (for a total of 100X100) fenced on a corner lot, with a wooded lot next to me. Will be paid off in about 6 more years. Lots of neighborhood kids. Tax assessment: $49,000, paid $38000 for it 6 years ago. Only have one credit card, and it stays locked up in the safe deposit box at the bank. I'm grateful for my job in service. The more stuff that comes from China, the more stuff breaks and I go and fix it.

Post office is a 5 minute walk away, as is downtown Pulaski. In fact, if not for the tree's you could see the court house clock tower from my bedroom window.

Neighbors are decent, only a few section 8 houses. The rest are just working families, that are easy to get along with and try to stay out of trouble.

There's no walmart here, but there is one in the next town. We do have a magic mart though, which is like a "1980's style" walmart. The steer house, a small steak house where a family of three can eat for $30. Other restaurants too.

We're fortunate to have a food city here who's prices on their "valutime" line of food are even cheaper than walmarts store brand, so we don't even have a need to drive to the next town to get cheap groceries.

In fact, I built a little trailer for my bicycle and actually used it for some grocery shopping last summer.

Top that... :p

[George_1950]

...I have to say that Volker is a good appointment by Obama. He and Reagan made the tough choices in the 1980s to kill the Carter recession/inflation. He took alot of heat for it ,but his and Reagan's strong dollar policy was right on. Sometimes you just have to ride out an economic downturn...

If he can convince the Keynesian on Steroids Obama that then he will do this country a service. (I wonder if President Obama will tone down his "failed policies of the last 30 years" pablum now that Obama has selected one of it's architects?????)

On a negative note ;he screwed up the UN Oil-for-Food investigation badly .
....

Volker's time may be passed, unfortunately; even so, he isn't really welcome at the White House, is he? His appointment reminds me of Judd Gregg's: window dressing. Except, Volker may be too vain to realize that he has made a deal with the devil, so to speak. "Feb. 5 (Bloomberg) -- Paul Volcker has grown increasingly frustrated over delays in setting up the economic advisory group President Barack Obama picked the former Federal Reserve chairman to lead, people familiar with the matter said." Volker, Summers Tangled In a Power Struggle

[tomder55]

Volker's time may be passed, unfortunately

Possibly... he's older than McCain.

Beyond that Lawrence Summers;I don't believe he is ideologically radical (as long as the President gives consideration to his advice). Summers pushed for cap gains tax reductions when he was heading Treasury for Clintoon ,and from time to time has called for tax cuts . He purportededly is a fan of the late great Milton Friedman .

In his op-ed eulogy of Freidman however ,Summers did write something that I dispute .
I believe that some of the great challenges we face today, like rising inequality and global climate change, require that the free market be tempered instead of venerated.
http://www.nytimes.com/2006/11/19/op...19summers.html

[excon]

Hello Choux:

It's hard to say how bad it's going to be (or IS) when we haven't hit bottom yet.

There are STILL huge losses in the economy that haven't been wrung out yet. Until such time as people begin to owe LESS on their homes than their homes are WORTH, we're still headed DOWN!

That time is coming. I don't know WHO is going to take those losses - The homeowner? The bank? The government? We shall see, shan't we?

excon

[tomder55]

Until such time as people begin to owe LESS on their homes than their homes are WORTH, we're still headed DOWN!

exactly ;and creation of artificial floors delays the inevidible . Eventually the market finds it's level . Then the people who don't own homes because they waited and played by the rules will be able to buy a home at it's true market value using old and well established credit rules.

[George_1950]

.... Eventually the market finds it's level....

"A Yield-Curve Rally on Wall Street [Larry Kudlow]

"The upward-sloped yield curve has come to Wall Street for a real bailout of the big banks.

"Today, Citigroup CEO Vikram Pandit told Bloomberg that the bank has turned profitable with its best numbers since 2007. This echoes what BofA CEO Ken Lewis told CNBC about two weeks ago. At the heart of this newfound profitability is a very simple but powerful idea: When short-term Treasury rates are well under long-term rates, banks profit. This is principally because banks borrow short to lend longer.

"Back in 2006 and 2007 the yield curve was inverted, and it took its toll on the banking system — playing a major role in the credit crunch. Now, however, Citi, BofA, and probably many others are experiencing good trading profits and good money on their various servicing functions for consumers, corporations, and governments."
A Yield-Curve Rally on Wall Street [Larry Kudlow]

Kudlow's Money Politic$ on National Review Online