US Economy

[Lotus Fury]

Originally Posted by Moto44

There is a wild card in this equation that can never be predicted or quantified - perception.

Take gasoline, for example. You can also make similar economic forecasts based on fuel consumption and costs. However, perception over what is a high cost for a gallon of gasoline changes. The same is true of housing costs. Priorities can also change.

The gas example is a great one. It shows how wild a market can get, both on the supply side, middleman and consumer. The supply side is making a killing. Middleman is in the same bad shape he's always been in. And now it's the consumer that is baring the brunt of the market. I think it's freaking crazy to have gas prices at $3 or so a gallon. 15 years or so ago it was around a $1. But soooo many factors play into the price of gas it's wild. And we're still on the low side of the gas price equation with Europe.

One other interesting tidbit. Ever notice that gas prices for different grades are normally around $.10 a gallon difference? (at least around Pittsburgh) Think about that for someone that can use either premium or regular. At $1 a gallon reg and $1.20 for premium there is a 20% difference in price. So it would make since to use premium gas if you got 20% better mileage, which most cars won't. But at $3.00 reg and $3.20 premium you need to get less than 10% difference in mileage, which some cars can do. So now you can buy premium gas & SAVE money. Which is why you might see differences in grades of $.12 or $.15 a gallon, which I am starting to see around Pittsburgh.

[def]

All I know is housing in the bay area sucks for those who don't own houses, I currently rent one

[SweetDaddyD]

Well, we have actually fallen below Canada's dollar now.
http://biz.yahoo.com/ap/070723/dollar_gold.html?.v=6

I remember all the joking we used to do about the Canadian dollar being nearly worthless.

And the problem with the premium gas equation above is that PREMIUM GAS DOES NOT GIVE YOU BETTER MILEAGE! (it prevents detonation on higher compression engines and you can actually get worse mileage using it a vehicle not designed for it)

[TimMullen]

Originally Posted by SweetDaddyD

And the problem with the premium gas equation above is that PREMIUM GAS DOES NOT GIVE YOU BETTER MILEAGE! (it prevents detonation on higher compression engines and you can actually get worse mileage using it a vehicle not designed for it)

Actually, on some engines, the ECU can adjust for the premium gas, and advance the timing, etc. and improve power and mileage. The opposite is also true, that with a low grade gas, the ECU can "back things down" and accommodate the lesser gas.

Heck, even my old 1980 Honda could get better gas mileage on premium. All I had to do was advance the timing a few degrees and things worked better (and I had to pay for the better gas).

It all depends on the engine and it's controls, and it definitely is not true for all (or even most?) engines.

[Lotus Fury]

Originally Posted by SweetDaddyD

Well, we have actually fallen below Canada's dollar now.
http://biz.yahoo.com/ap/070723/dollar_gold.html?.v=6

I remember all the joking we used to do about the Canadian dollar being nearly worthless.

And the problem with the premium gas equation above is that PREMIUM GAS DOES NOT GIVE YOU BETTER MILEAGE! (it prevents detonation on higher compression engines and you can actually get worse mileage using it a vehicle not designed for it)

Per the gas thing I always noticed better mileage with premium - I use the trip meter for every fill up to keep track of it. I will admit though that it's not the norm after doing more research - see here: http://www.consumerenergycenter.org/...s_premium.html

But the US dollar is still worth more than Canadian dollar: (not much though) http://www.bloomberg.com/invest/calc.../currency.html

[Old Guy]

Start reading the Economist ... I think you'll feel better. All in all, I think the U.S. economy is resilient and robust, with low unemployment, good job creation, and a high standard of living. The real estate situation is just another economic cycle - not likely to lead to a depression.

[IamBatman]

Originally Posted by Old Guy

Start reading the Economist ... I think you'll feel better. All in all, I think the U.S. economy is resilient and robust, with low unemployment, good job creation, and a high standard of living. The real estate situation is just another economic cycle - not likely to lead to a depression.

I really want to believe that. I'm an optimistic person in nature, (when both my parents fell ill, my car got stolen, and I lost 1/2 of my savings, I always believed things would work out) and I do believe the us will come out of it strong in a decade.... but I'm also a data driven person by my engineering training... and I haven't seen any real data to assure me that a crash won't happen. The only happy news I've read are from NAR economists (aka iraqi information ministers) David Lereah and who ever is sucessor's name is telling us "the recovery is a few months away, its a great time to buy!"

[Moto44]

I have come through a number of recessions in a very recession sensitive business. In my experience, even when the tell-tale signs are there, it is impossible to predict when or how corrections in the market occur. There are too many indeterminable variables.

You also can't predict the next technological breakthrough that could spur the economy.

[IamBatman]

Originally Posted by Moto44

I have come through a number of recessions in a very recession sensitive business. In my experience, even when the tell-tale signs are there, it is impossible to predict when or how corrections in the market occur. There are too many indeterminable variables.

You also can't predict the next technological breakthrough that could spur the economy.

Robert Shiller: Yale Economist (see graph 1) predicted the dot.com bust, Greenspan talked about irrational exuberance right before the bust. Yet there were many people caught with their pants down with pets.com stock (I didn't have pets.com but I did have plenty of tech stock back in the day)... people were warned, we just didn't listen. I won't make the same mistake twice.

[IamBatman]

Originally Posted by Moto44

Live within your means and keep your material expectations simple and you won't have anything to worry about.

yep, thats exactly what I'm doing... actually living well below my means, but still enjoying life.

[25psi_Elise_Killer]

Put options are your friend today.

[Moto44]

True that all of the warning signs were there, but they were there and talked about for years. There are also plenty of examples of impending downturns that never materialize.

Like you, I am an optimist by nature and I was much more concerned about such things when I was younger. As I said at the outset, protect yourself by living well within your means and live as simply as you can, while still allowing yourself certain pleasures.

We will continue to see and face difficult times. This is the natural process of evolution and adaptation. If I ever have to give up my Elise, I will still be happy. How about you?

[fishguy]

If the economy is so bad, why is/was the dow at record highs this week?
The media is so biased that it will not report this stuff the way they will if it were bad news. They cannot, or refuse to, report anything good happening under this administration. I am not a pro bush guy, but I do know that the media absolutely sucks. TV, and the newspapers; they are very agenda oriented.
The economy is just fine, and if you like to worry yourself over things, then just turn back on the news or read the paper, you will be presented with all the bad news you want, truth or not.
The media gives commentaries, their opinions, never just the news anymore. CNN, Fox, all of them, they censor what they present, and choose not to present much of the truth, or just choose not to report on certain stories.
I am going to give you many jump roping sheep, as thats what many are who buy into this crap.
give me a break, and again, I am not a fan of GWB, but am a fan of reality and the truth.
I think the OPs' location says it all.
fishguy

[Andrikos]

Anybody who thinks the real estate insanity (just like the late 90's internet stock bubble) is sustainable is out of their mind or at least ignorant.

Lenders have been criminally negligent in "pre-approving" everybody and their unemployed brother for insanely large mortgages that were backloaded and completely unrealistic.

They didn't care because they would dump the mortgage after having made their money to high risk lenders.

That and low rates led us to the misery that is sure to follow in a couple of years.

People with money make money in good times and bad and they are thes one who'll buy the foreclosures and rent them to people who lost their house and can't approve for a loan for at least 7 years.

Fun, fun, fun.

[IamBatman]

Originally Posted by fishguyAZ

If the economy is so bad, why is/was the dow at record highs this week?:

The economy RIGHT NOW is doing fine. but the boom was fueled by debt and consumption, not productivity... people taking out HELOCs to pay for Hummers, granite counters and plasmas.
All that "wealth" created by house prices doubling will go away with tighter lending and higher rates

[smoseley]

Originally Posted by fishguyAZ

If the economy is so bad, why is/was the dow at record highs this week? The media is so biased that it will not report this stuff the way they will if it were bad news. They cannot, or refuse to, report anything good happening under this administration. I am not a pro bush guy, but I do know that the media absolutely sucks. TV, and the newspapers; they are very agenda oriented. The economy is just fine, and if you like to worry yourself over things, then just turn back on the news or read the paper, you will be presented with all the bad news you want, truth or not.

The underlined comment says it all... you know nothing about the economy, nor do you care to know anything about it, yet you believe that anyone who doesn't "pay attention" to your sole defining characteristic of a good economy is ignorant or manipulated by the mass media.

I, for one, don't even watch "the news", but I know enough to say that "the dow" has little effect on macroeconomics. Specifically, the topic of this thread questions how the IMMINENT crash of the American housing market will affect American home owners, causing a huge shift in wealth from the private sector to lending institutions, and how that will in turn affect the US economy, including the impending recession that will occur as a result, with little spending and probably even a slow down in your oh-so-precious DOW.

[25psi_Elise_Killer]

Ok, who didn't lose money today??

[smoseley]

Originally Posted by 25psi_Elise_Killer

Ok, who didn't lose money today??

I sold Apple today. My realized gain for the day was $5000.

Not bad for 6 months of ownership... I'm gonna go buy a couple free iPhones now.

Free investing advice: you don't make money by selling stuff when it goes down.

[25psi_Elise_Killer]

Originally Posted by transio

I sold Apple today. My realized gain for the day was $5000.

Not bad for 6 months of ownership... I'm gonna go buy a couple free iPhones now.

Free investing advice: you don't make money by selling stuff when it goes down.

Unless you sell short

[Lotus Grrl]

So true!!

Originally Posted by Andrikos

Anybody who thinks the real estate insanity (just like the late 90's internet stock bubble) is sustainable is out of their mind or at least ignorant.

Lenders have been criminally negligent in "pre-approving" everybody and their unemployed brother for insanely large mortgages that were backloaded and completely unrealistic.

They didn't care because they would dump the mortgage after having made their money to high risk lenders.

That and low rates led us to the misery that is sure to follow in a couple of years.

People with money make money in good times and bad and they are thes one who'll buy the foreclosures and rent them to people who lost their house and can't approve for a loan for at least 7 years.

Fun, fun, fun.