Posted on 02/13/2009 1:19:51 PM PST by BenLurkin
In the 70’s and 80’s, your bank wasn’t telling lies to your face while using their influence in Congress to pick your pocket.
In the 70’s and 80’s, you didn’t have any such term as “liar loan.”
In the 70’s and 80’s, a “AAA” rating on a debt instrument meant is was top-quality.
In the 70’s and 80’s, you had to have more than a pulse and a SSN to get credit.
So are you saying that if you have lived above your means, lived on credit, then this is a bad economy. If you have lived within your means and are relatively debt-free, then things aren’t so bad. Maybe that’s why the late 70’s-early 80’s economy seemed worse. It hit everyone. Everyone had to wait in line for gas and pay 20%+ for a mortgage.
Ben, I happen to think it WILL be worse. Not because of the financial aspects so much but because of the psychological aspects. We had not been attacked by terrorists on our soil during the 1970’s or 1980’s. I think the first attempt in the Trade Towers was in the 90’s... anyway, it’s the “perfect storm” of these two things.
Another thing is I think people are weak today. I grew up used to making sacrifices. One bathroom in the house, etc. Sounds silly, I know, but today, people are so used to cushy comfort and so I think the majority of Americans today are, in a word, wimps.
I have to say, in the 70’s, the government was doing some spectacularly stupid things.
Remember wage and price controls?
Remember the stupid “Whip Inflation Now” buttons?
Remember the idiotic gas rationing?
There was plenty of stupidity. But it wasn’t, IMO, as bad as this is going to get. You could still get credit, it just cost you an arm and leg in interest. The Fed had a reasonably competent man at the head. We didn’t have states headed for insolvency, only cities.
Today, we have entire freakin’ states that are headed for insolvency - starting with California, but there are several others on deck in the warm-up cage.
In the 70’s, sure fuel oil was high, gas was high, etc — but the environmental movement wasn’t trying to impose a “carbon tax” - we didn’t have a bunch of self-appointed bunny cops wandering around looking for wood smoke from your chimney to cite you for pollution. We had not handed over control of auto emissions to California, or declared exhaled breath and flatulence as “global warming gases” - to be regulated and taxed.
There’s a LOT of stuff different from the 70’s. If I had my druthers between now and then, I’d take the 70’s compared to what is coming down the road now.
Well I think the confidence crisis stems from 401k’s evaporating, house prices plummeting and jobs disappearing.
My brother is with AIG ...
You drive by a local shopping center and they are empty, many of the stores are gone. On our block half the houses are for sale, one being auctioned next week by the bank.
“In the 70’s and 80’s, you had to have more than a pulse and a SSN to get credit.”
So true.....
Try graduating from college, trying to get an entry level job and start a family in the middle of the Carter Recession with 20% unemployment and 20% interest rates. Like I did. Then come back and tell me its worse now.
Not seemingly in consumer goods. Have you shopped at a Walmart lately?
Yes, and a great proportion of the US population is in hock up to their ears. I mean that. I mean that they have 10’s of thousands of dollars in credit card debt they’re paying only the minimum on every month. I mean that there’s a whole friggin’ state that took out hundreds of billions of option-ARM mortgages, and they made the minimum payment, while the rest of their interest was added to the loan and negatively amortized.
I’m telling you that there’s a significant portion of this population who used to use their house like an ATM. They’d run up huge credit bills and every couple of years, they’d cash the unsustainable increase in their home valuation out of their house with a HELOC to pay down the credit card and auto debt.
I’m telling you that there are 1.2 cars for every registered driver in the US. The auto companies AROUND THE WORLD can go out of business tomorrow and as long as we can get tires and parts, no one will be walking anywhere for at least five to 10 years.
I’m telling you that we have vastly overbuilt homes, apartment buildings, retail shopping space, restaurants, office buildings... all based on a boom in credit, not on actual demand. There won’t be enough people, nor economic activity in the US to soak up this excess for years and years. The fastest, best thing we could do to ameliorate the US housing price collapse would be to go into these vastly overbuilt communities in California, Nevada, Arizona, Florida and just start burning houses down. Not a house here, or a house there. I’m talking putting the match to square mile upon square mile of houses.
What I’m trying to pound through to people, but they just don’t get it is how far over the actual trendline of sustainable growth this economy went based on a huge, puffy balloon of easy credit.
One of the reasons why WWII brought the US economy back was that as a result of the war, we obliterated the competing manufacturing capacity of Japan and Germany. The US was the only big manufacturing country left standing at the end who could export goods.
I have a research note here that has a paragraph that starts out with the following:
“Economy saddled with $1 trillion of excess capacity...” and ends with “...there is now 30% idle capacity in the manufacturing sector, a level only seen once before in the past five decades.”
Are y’all getting this yet?
He's simply following Lenin's maxim, "The worse, the better".
That's not surprising for a communist.
“I remember the 70’s. I was a new bride, just moved to a new state where my husban’s job didn’t pan out. We cleaned chickenhouses, had little food, shoveled roofs and eventually had foodstamps for about 6 months. Learned how to budget food on the twenty-one dollars we got.”
I left the army in December 1973 and everyone thought that I was insane to leave during that recession. I remember meat shortages and how Americans were eating horse meat (they were).
Many stores experimented with mixing grain products with ground beef so as to have something to sell, gas stations did not have gasoline sometimes and we all remember the gas lines when they did.
I believe there were some dirty loans out there (3% intro rate, payments ballooning to 19% type). However, my ex-brother-in-law was given a sweetheart family deal on a house in a very nice neighborhood by a family member- the house was sold to him for 180K when the market value was 260K. He refinanced every year for 7 years and now owes 450K, is months behind and wants a bail-out. Yeah, our tax money should go to support THAT.
Many stores experimented with mixing grain products with ground beef so as to have something to sell, gas stations did not have gasoline sometimes and we all remember the gas lines when they did.
We hsd movrd to the country and farmers were losing beeves that were butcherd in far fields. I remember a neighbor getting 3 to 5 for shooting up a couple of out of state “sports” who were taking a whiz next to his pasture.
What was true on Wall Street was also true of the country and the households in it. Debt wasn't as large or as wide spread then as it is now: those WWII veterans were a lot more tightfisted and self-denying than their children and grandchildren.
Plus, we're softer than the previous generation was and we're more inclined to complain. Recognizing that, though, doesn't make the anxieties go away.
In 2009, Obama says the gov’t needs to bail you out or we’ll never recover.
Which course of action inspires?”
Better yet, which course of action worked/working? We learn from our mistakes, Reagan new this, that's why his tax cuts pulled the economy out from the Carter mess. Obama may read up on history and the mistakes that others have made, but he'll never learn.
I'll put it on the Things We Used To Have list along with Loans Available From Banks, Home Equity Lines of Credit, Savings, and American Jobs Available Exclusively To Native-Born Americans.
I wish more people would learn from your posts instead of having to learn the hard way, through personal experience. Too many here can’t believe what you are saying until they personally get laid off or their house value falls 50%. We’ve seen the stock market fall 40%. That tells me that at least 6 to 9 months down the road, corporate earnings will be down. The fact that the stock market is still falling illustrates that many investors understand that good earnings are no-where on the horizon. You would think people here would be clued in by that, instead of thinking the market is just manipulated.
Like I said, you are trying to teach them and they aren’t going to learn from you. Four years from now they will say “that NVDave guy was right. I should have known...”
You would think your call on the housing bubble would establish some credibiilty Oh well...
It had to start back then so they can blame Bush for everything!!
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.