hobdayd
Member
Wow...depressing
The coming economy and us
- Thread starter Checkswrecks
- Start date
OldRider said:
With respect to your first question, politicians wouldn't cherry pick numbers to make whichever case they want, now would they?
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Seriously, the Dems and Republicans are both right, because they are careful to pick how they want to present the facts. The Republicans always bring out this chart to show how big the debt is and how it is growing. We keep hearing "Gee - Look at how high it got under Obama." And at face value the Republicans are right, it's meant to be a scary chart.
But that's pretty misleading in real life, because it doesn't relate whether we can pay that debt or not. It's like you trying to buy a car and telling the bank that you owe somebody $10,000. If you work for minimum wage, you won't get a loan. If you make $500,000/year, that $10,000 debt is nothing and you'll get the new loan with no problem.
And that's why Obama has been correct in saying that his team has cut the debt ratio (he also talks about the debt per person). The economists divide the debt by how much money the country generates and show it in the chart shown below. By those terms, Obama inherited the 2007-2009 meltdown AND war debt from Bush Jr, it took years to get a handle on it, and now the ratio is getting better. The yearly change and trend have been a lot better, too. I may not have agreed with a number of his policies, but he did this right and we individuals have benefited.
The answer to your second question is that because the population naturally grows and accept that a little inflation devaluing the dollar is normal, these divisions of the big debt number can make it go away. It's why Clinton's term looks so good in both of the above charts. An interesting observation to me is that we think of the Republicans as the ones more conservative money-wise and the ones who would reduce the debt and that was historically true. But you can see that the philosophy changed when Ford came into power. Remember the term "voodoo economics" under Reagan? The debt ratio got worse under Ford, Reagan, and then each Bush; while the years of Carter, Clinton, and Obama reversed the trend. I have no idea about why, it's just how thing worked out.
Debt is just a number by itself and not something to be afraid of. To me, the reason is in a chart which shows the debt per capita, as below. If you compare now to the start of the Great Depression or the World-wide post WW1 depression, we aren't quite as debt-ridden now. So, yes, the number of dollars in the first chart was really bad, but the growing population and each of us being more productive means we are treading water for today. As for tomorrow, it's why I started this thread. We REALLY don't want the ratio (above) or per capita situation (below) to go up by the little amount which would bring us to the level of 1929.
To me, our collective national goal should be to reduce the load before proverbially some straw breaks the camel's back, and our individual goal is to recognize what we can each do.
We need to use up more tires, so you can sell more of them!
::003::
I have a really hard time giving Obama any credit whatsoever for reducing spending. If he spent less it was only under duress from the Republican Congress. And it's easy to judge where he ended up favorably against his first year (2009) where the deficit was a whopping 9.8% of GDP. Also, much of the reduction came from the sequester at the expense of our military, which is now dilapidated, as well as national parks, research, etc. Reducing spending under duress while running the country into the ground is nothing to crow about.Checkswrecks said:
Just as Reagan ran up a ton of debt rebuilding the military in the 1980s, I expect we'll see the same from Trump. What choice do we have? We can't even keep our airplanes in the air any more. It's embarrassing.
shrekonwheels
New Member
Taxes are profits for the government. When they have too big of a blow out sale, they lose profits and the ability to maintain and or pay bills.OldRider said:
In other words, we have lost much of our tax base thus why the negatives. Spending is down however, way way down. It is still a nightmare, but it is downgraded form Freddie is going to pull your through your bed type of nightmare.
The Iraq war cost $1.04 Trillion with most of that being paid before Obama took office. No matter how you slice up the numbers $20 Trillion is $20 Trillion. We've never been this far in the hole before.
shrekonwheels
New Member
You can safely say that with every single administration save Jacksons.OldRider said:
There are many, many factors at play but referring to what I posted above is a big start.
http://duanegraham.files.wordpress.com/2012/03/net-changing-in-govt-spending.jpg
fredz43
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Really? From all that I have read, the problem was that the Iraq war was fought without it being paid for, never was put into the regular budget. That is how we went from a surplus in 2000 to the debt we had in 2008. How was the Iraq war paid for by 2008 when we didn't have any tax increase to pay for it after that surplus was spent? Maybe I missed something.OldRider said:
In 08 the debt was already $5.7Trillion and while there was a surplus of $329 billion, it didn't help much. I said that wrong, what I meant to say was the cost of the war was already included in the national debt before Obama took over, not paid for.fredz43 said:
groundhog
New Member
I rode my bike today
hobdayd
Member
You also have to consider when the debts become payable and the ability to pay...and who holds the debt and wether they or anyone else will be in a position to continue.
The cost of the wars is now pegged to have been 4-6 Trillion dollars, which is borrowed money and we pay interest on it which has been compounding. Fighting on the other side of the planet means we pay $3.9 MILLION per soldier when you average it out! http://time.com/3651697/afghanistan-war-cost/arjayes said:
You mentioned the 2009 deficit without noting the Federal budget year runs from October to October. That 9.8% of GDP was a bill which GW had ALREADY rung up, as the first year of any Presidency is already in place and is inertia from the previous administration. Plus, remember the banks collapse, housing collapse, and major industry collapse that began in 2007? A true 1930s collapse was averted through not letting market forces go, as happened back then. There was heavy borrowing when Obama was transitioning in so what I was giving Obama credit for is the fact that during his time in office, a LOT of effort has gone into addressing that borrowing and it's shown by the right end of the second chart above with a downward reversal in the debt/GDP.
Add the wars with digging out of the 2007-2009 crisis, plus compounded interest, and you get to OldRider's big numbers. But again, put it in terms of per capita and it is manageable, as long as we DO manage and don't pile on huge new debts. Don't let either side succeed with scare tactics.
I don't think that per capita dog will hunt.
In 2000 we had 282 million people and owed $5.5Trillion. $19,500 per person
In 2016 we have 323 million people and owe $20 Trillion. $61,919 per person
That's for the total populatin. When you break it down to per taxpayer, we owe $166,000 ea.
There's no way to sugar coat $20 Trillion, we're screwed. JMHO
It took several hundred years to get a population of 282M and it only took 16 years to add another 41 million. The growing population is what will bring this country to it's knees. Add another 30-40 million mouths to feed with no or very little job growth and that's it.
In 2000 we had 282 million people and owed $5.5Trillion. $19,500 per person
In 2016 we have 323 million people and owe $20 Trillion. $61,919 per person
That's for the total populatin. When you break it down to per taxpayer, we owe $166,000 ea.
There's no way to sugar coat $20 Trillion, we're screwed. JMHO
It took several hundred years to get a population of 282M and it only took 16 years to add another 41 million. The growing population is what will bring this country to it's knees. Add another 30-40 million mouths to feed with no or very little job growth and that's it.
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Dogdaze
Well-Known Member
On a lighter note, anyone remember a film from the 70's called 'Logan Run'? Their solution might be the way to go to reduce old-age related costs............ ::013::OldRider said:
WJBertrand
Ventura Highway
He must have meant spent, not paid for.fredz43 said:
That's correct. I meant the cost was included in the total debt, not paid for.WJBertrand said:
Dogdaze said:
Hey WAIT a minute, junior!!!
???
I remember Logan's Run! Have a copy of it as a matter of fact...
CW, you would have enjoyed the meeting I'm working this week. It's for a major financial services company, and a couple of the keynotes have talked about the changes coming with the forthcoming administration; namely, the expectation is that it will resemble the first of the second Bush terms, economic growth in the first two years, followed by inflation and devaluation. But as with the election, it's just as likely that we need to throw conventional wisdom out the window.
CW, you would have enjoyed the meeting I'm working this week. It's for a major financial services company, and a couple of the keynotes have talked about the changes coming with the forthcoming administration; namely, the expectation is that it will resemble the first of the second Bush terms, economic growth in the first two years, followed by inflation and devaluation. But as with the election, it's just as likely that we need to throw conventional wisdom out the window.
I'm interested to know who the speaker was and if his analysis is published.hobdayd said:
Donk
Well-Known Member
All good reading. Bottom line is be smart and take care of your own finances. Save money and limit debt. If you do that as much as possible regardless of what happens with the economy you'll be in the best possible shape.
To me that means ride an S10 that, like me, is frugal and stay away from the Ducatis and BMWs that eat a good piece of your lunch.
To me that means ride an S10 that, like me, is frugal and stay away from the Ducatis and BMWs that eat a good piece of your lunch.
hobdayd
Member
The presentation was by Alan Beaulieu from ITR Economics.
I only have an audio copy of the presentation which is large and difficult to share... but I did a quick search and found this more recent update from someone who attended the lecture and posted a write up...
As a business owner, wouldn’t it be nice to know how the economy is going to perform in the future, so adjustments can be made to the business model before a change in business climate? I recently attended Alan Beaulieu’s economic forecast, sponsored by Barnes Dennig, Huntington Bank and DBL Law. Alan discussed the economic outlook for 2016 – and even 20 years in the future – as well as the reasons why he is confident his predictions of the future are accurate. Utilizing Alan’s forecast means business owners don’t have to wait until they’re in the middle of an upward or downward economic cycle when it may be too late to make the appropriate adjustments.
By using historical trends with current macro-economic, governmental, and demographic data, Alan’s company, ITR Economics, warned its clients in March 2006 that a recession would begin in early 2008 and extend through 2009. They also accurately predicted the recession would be worse than anything in the previous 25 years. ITR boasts a 94.7% forecast accuracy rate when looking at macro-economic data one year later. I was intrigued by his presentation (albeit a little frightened of his prediction of another Great Depression on the horizon), so I decided to read Alan’s newest book, Prosperity in the Age of Decline. By reading the book, I hoped to gain insight into the predictions and determine strategies to help plan appropriately for future business cycles.
Throughout the book, Alan and his co-author and brother, Brian, give individuals and business leaders information and strategies necessary to plan for the upcoming business cycles they predict for the U.S. and globally. The authors begin by looking at leading indicators in the market to help identify economic trends and which indicators provide the most relevant information far enough in advance to allow businesses to plan for the upcoming changes. A few examples include Corporate Bond Prices (12/12 rate of change), Institute for Supply Management’s (ISM) Purchasing Managers Index, and the U.S. Leading Indicators as issued by the Conference Board, among others. The authors predict another recession around 2018, or 2019, leading into a prosperous period during the ‘20s, which will eventually give way to a Great Depression around 2030. An aging population in 2030 (almost 20% of US population will be 65 and older versus 13% in 2010), a rising national debt, the Medicare Health Insurance trust fund projected to be depleted by 2026, and the Social Security OASI trust fund projected to be depleted by 2036 were among the leading drivers signaling a Great Depression in the future, unless dramatic change is implemented now.
Managing Business Cycles
How do business leaders prepare for the upcoming business cycles to make certain businesses thrive during the economic good times and stays afloat during the economic down swings? Knowing when the various cycles are coming a year or two in advance is only half the battle. Knowing how businesses should react and strategies to implement is just as important. The Beaulieu brothers discuss various strategies for each phase of the business cycle and give ideas for setting businesses up to succeed in the next 20 years and beyond. They end the book describing eight signs that will signal the Great Depression is on the horizon, as well as six things the younger generation should do to help minimize their risk during that time. Sure, the Great Depression can be avoided or not occur as they predict, especially if our nation acts quickly to raise the retirement age to at least age 72, decrease government spending and concentrate only on mission-critical programs. Also, significant technological advances need to occur (such as a new energy source that could boost the US economy and tax revenues substantially), and our culture must decide to dedicate itself to healthy lifestyles that would significantly reduce health care costs. But the chances of those suggestions occurring quickly appear slim in our current environment.
Wouldn’t it be great to be prepared and have a good strategy in place in the event the depression does occur? One thing is certain: our economy will continue to experience various highs and lows throughout time. Predicting when these cycles will impact businesses and having a strategy in place for when they do, will certainly set up business owners to succeed in the years ahead.
I only have an audio copy of the presentation which is large and difficult to share... but I did a quick search and found this more recent update from someone who attended the lecture and posted a write up...
As a business owner, wouldn’t it be nice to know how the economy is going to perform in the future, so adjustments can be made to the business model before a change in business climate? I recently attended Alan Beaulieu’s economic forecast, sponsored by Barnes Dennig, Huntington Bank and DBL Law. Alan discussed the economic outlook for 2016 – and even 20 years in the future – as well as the reasons why he is confident his predictions of the future are accurate. Utilizing Alan’s forecast means business owners don’t have to wait until they’re in the middle of an upward or downward economic cycle when it may be too late to make the appropriate adjustments.
By using historical trends with current macro-economic, governmental, and demographic data, Alan’s company, ITR Economics, warned its clients in March 2006 that a recession would begin in early 2008 and extend through 2009. They also accurately predicted the recession would be worse than anything in the previous 25 years. ITR boasts a 94.7% forecast accuracy rate when looking at macro-economic data one year later. I was intrigued by his presentation (albeit a little frightened of his prediction of another Great Depression on the horizon), so I decided to read Alan’s newest book, Prosperity in the Age of Decline. By reading the book, I hoped to gain insight into the predictions and determine strategies to help plan appropriately for future business cycles.
Throughout the book, Alan and his co-author and brother, Brian, give individuals and business leaders information and strategies necessary to plan for the upcoming business cycles they predict for the U.S. and globally. The authors begin by looking at leading indicators in the market to help identify economic trends and which indicators provide the most relevant information far enough in advance to allow businesses to plan for the upcoming changes. A few examples include Corporate Bond Prices (12/12 rate of change), Institute for Supply Management’s (ISM) Purchasing Managers Index, and the U.S. Leading Indicators as issued by the Conference Board, among others. The authors predict another recession around 2018, or 2019, leading into a prosperous period during the ‘20s, which will eventually give way to a Great Depression around 2030. An aging population in 2030 (almost 20% of US population will be 65 and older versus 13% in 2010), a rising national debt, the Medicare Health Insurance trust fund projected to be depleted by 2026, and the Social Security OASI trust fund projected to be depleted by 2036 were among the leading drivers signaling a Great Depression in the future, unless dramatic change is implemented now.
Managing Business Cycles
How do business leaders prepare for the upcoming business cycles to make certain businesses thrive during the economic good times and stays afloat during the economic down swings? Knowing when the various cycles are coming a year or two in advance is only half the battle. Knowing how businesses should react and strategies to implement is just as important. The Beaulieu brothers discuss various strategies for each phase of the business cycle and give ideas for setting businesses up to succeed in the next 20 years and beyond. They end the book describing eight signs that will signal the Great Depression is on the horizon, as well as six things the younger generation should do to help minimize their risk during that time. Sure, the Great Depression can be avoided or not occur as they predict, especially if our nation acts quickly to raise the retirement age to at least age 72, decrease government spending and concentrate only on mission-critical programs. Also, significant technological advances need to occur (such as a new energy source that could boost the US economy and tax revenues substantially), and our culture must decide to dedicate itself to healthy lifestyles that would significantly reduce health care costs. But the chances of those suggestions occurring quickly appear slim in our current environment.
Wouldn’t it be great to be prepared and have a good strategy in place in the event the depression does occur? One thing is certain: our economy will continue to experience various highs and lows throughout time. Predicting when these cycles will impact businesses and having a strategy in place for when they do, will certainly set up business owners to succeed in the years ahead.