The credit crunch...Debt and the federal reserve

[denislawsbackheel]

Not 3 months. A recession is 2 successive quarters of negative growth. We are still in positive growth, small though it is. So the earliest we could be in recession is 6 months away.

 

[Manchester1894]

Can I ask what actually happens during a recession?

 

[mackenzie]

Not 3 months. A recession is 2 successive quarters of negative growth. We are still in positive growth, small though it is. So the earliest we could be in recession is 6 months away.

Just saying what the experts say denis.

Haven't got a clue personally.

 

[Knight1979]

Can I ask what actually happens during a recession?

Economic output usually measured in Gross Domestic Product actually decreases or recedes (hence the name recession) due to a decrease in consumer, private and public consumption. This usually leads to an increase in unemployment especially in sectors like construction, retail and manufacturing.

The current situation is particularly bad though because of inflation brought on by rising energy costs. Typically inflation ocurrs because of economic expansion which can put a strain on labor supply, forcing up wages and causing inflation.

I'm afraid we are going to be looking at stagflation pretty soon where GDP decreases and inflation increases. This happened during the oil embargo but that was only temporary. Now we are faced with real energy supply problems so it could last a lot longer.

 

[Joycee Banercheck]

Do you know what? I've learnt more about the real world on this forum than anywhere else.

Well played, KBS. I remember your debate with Black Sheep and hoped that you were right. However, unfortunately for everyone who will be affected by this, you weren't. But still, kudos for holding your hands up. I'm gutted that you've suffered from it directly and wish you luck finding your feet again.

I've tried speaking to a mate about this credit crunch thing. He doesn't drive so "it's not gonnat affect" him. He's got a fixed-rate mortgage for the next two years so "it won't affect" him. The blinkered fool doesn't realise the knock-on effects that the searing price of oil has on everything we buy and that a credit crunch could last a lot longer than the expiry date on his current mortgage rates. I'm strapping on the seatbelt for this ride.

 

[mackenzie]

And for all those that think that the dole is just for chavs/"skiprats"/ the bone idle or the deluded.....think again.

A recession means that nobody is safe.

I've lived through two recessions. But this time it won't just be the manufacturing industry that bears the brunt (that was decimated in the last ones)...it will be everyone.

 

[Knight1979]

We will all feel it, every business and every household.

 

[jay66uk]

Yes it is as bad as they say. I got made redundant last week. I was an Independent Mortgage Adviser. It's gonna get worse aswell.

I'd just like to publicly apologise to Blacksheep as well when he said how bad it was a few months back. I shot him down as being a drama queen. He was 100% right. Unreserved apologies blacksheep.

Sorry to hear the news, mate. A lot of people on here are going to end up burned, I'm afraid, and we're all passengers now.

No need for any apology - you called it how you saw it. We were just looking at different parts of the same picture.

I hope you get some work sorted, mate.

 

[jay66uk]

I'm afraid we are going to be looking at stagflation pretty soon where GDP decreases and inflation increases. This happened during the oil embargo but that was only temporary. Now we are faced with real energy supply problems so it could last a lot longer.

The big problem we have is that since the deregulation of the 80s, property-linked borrowing has gone mad and credit availability has gone mad. We face a recession similar to the 1920s but with the addition of huge personal debt (which was almost unknown back then).

The billions being pumped into the finiancial markets to keep the market liquid and keep the banks from folding - happening in the UK and US - will have to be paid for at some point yet we will have falling tax revenues, increased demand for benefits, falling property and land values, and no further loan funds to try to buy our way out of trouble.

It has been said that Karl Rove and his cronies were aware this was coming and that this was one of the reasons for the Iraq war - wars stimulate output (and ward off recession in the short term) and also distract people from domestic problems.

 

[nijinsky's fetlocks]

I'm afraid we are going to be looking at stagflation pretty soon where GDP decreases and inflation increases. This happened during the oil embargo but that was only temporary. Now we are faced with real energy supply problems so it could last a lot longer.

The big problem we have is that since the deregulation of the 80s, property-linked borrowing has gone mad and credit availability has gone mad. We face a recession similar to the 1920s but with the addition of huge personal debt (which was almost unknown back then).

The billions being pumped into the finiancial markets to keep the market liquid and keep the banks from folding - happening in the UK and US - will have to be paid for at some point yet we will have falling tax revenues, increased demand for benefits, falling property and land values, and no further loan funds to try to buy our way out of trouble.

It has been said that Karl Rove and his cronies were aware this was coming and that this was one of the reasons for the Iraq war - wars stimulate output (and ward off recession in the short term) and also distract people from domestic problems.

On the money,Blacksheep.
Of course the worlds major capitalist economy knew an economic downturn was imminent.
Though there is a certain irony in that neo-con, warmongering bastard Rove being one of the leading orchestrators of the Iraq war,seeing as how the cowardly,hypocritical son of a woman was a draft-dodger himself in the Vietnam war.